Budapest Business Journal 19/22

BETTER KNOW A CEO Hays managing director Tammy Nagy-Stellini likes Hungarian wine and wanted to be a pilot once

BBJ HUF 1250 | €10 | $15 | £7.5

VOL. 19, NUMBER 22

Budapest Business Journal

STOCK EXCHANGE

〉PAGE 20 0 I DEC 2, 2011 – DEC 15, 2011

52%

of Hungarians are in debt

〉PAGE 4

HUNGARY’S PRACTICAL BUSINESS BI-WEEKLY SINCE 1992 | WWW.BBJ.HU

THE BSE HAS LAUNCHED NEW SERVICES TO BREATHE LIFE INTO HUNGARY’S CAPITAL MARKET. BUT WILL THEY BE ENOUGH? 〉PAGES 14-17

IMF-AID AFTER ALL Hungary has turned again to the IMF and the EU for financial assistance, but it wasn’t enough to avoid a downgrade to junk status by Moody’s.

The government, rather than addressing the issues, seems intent on finding scapegoats.

Could Orbán’s economic right hand be one of them?

ARTICLE 〉 PAGE 6

POLITICS Political apathy reflected in polls

BUSINESS The five projects we are watching in Budapest

TRENDS More people reject euthanasia than two years ago

Hungarians are not satisfied with the cabinet’s performance: the latest polls reveal that the popularity of the governing coalition has significantly dropped since the elections, and the prime minister, for the first time, is no longer the most popular politician. In general, fewer people are interested in politics than a year ago.. 〉PAGE 5

The government has revealed ambitious plans for developments in Budapest. If the planned projects are realized, the Castle district will get a major facelift, a new football stadium will be built, and a museum quarter will be established in the 6th district. The total budget for the projects is estimated to be HUF 70 billion. 〉PAGE 6

Euthanasia has always been a controversial issue, with legal, philosophical and moral questions surrounding it. In Hungary, the number of those accepting the practice has grown in the last two years. But simultaneously, an increasing number of people say they disapprove of any form of assisted suicide. 〉PAGE 4

OPINION

do not support any form of euthanasia agree with passive euthanasia only agree with active euthanasia too not answering do not know what euthanasia is

LIFE

ESSAY 01

ESSAY 02

UK Minister for Energy and Climate Changes Chris Huhne about the Durban meeting of the UN

Interim manager Áron Lukács about the benefits of sabbatical

〉PAGE 22

〉PAGE 22

Evolving Magyar cuisine In the past few years, gastronomy has at last come into vogue in Hungary. In 2011, the main characteristics of the renewal of Hungarian gastronomy have been the rediscovery of roots and commitment to quality ingredients. 〉PAGE 16

2 NEWS

WWW.BBJ.HU

NEWS FOR THIS PAGE IS FROM THE BUDAPEST BUSINESS JOURNAL’S DAILY BRIEFING, HUNGARY A.M.

NEWS in brief

Budapest Business Journal | Dec 2 – Dec 15

Default insurance costs on Hungary’s sovereign debt surged to a record high on November 25, a day after Moody’s announced the downgrade of the country’s sovereign rating to ‘junk’. Hungary’s five-year credit default swaps (CDS) traded around 644 basis points, rising from 603.8 basis points after the previous close. The previous CDS peak of more than 630 basis points was reached in March 2009.

BACK UP The Monetary Council (MC) decided to raise the central bank’s key rate by 50 basis points to 6.5% at a meeting on November 29 in line with market expectations. “If the outlook for inflation and risk perceptions remain persistently unfavorable, it may prove necessary to raise interest rates further in the coming months,” the MC noted. The council blamed the continued weakening of the forint and Hungary’s rising risk premia on the worsening outlook for global growth, the escalating debt crisis in the eurozone and “growing tensions” in the banking sector, including a government scheme allowing early repayment of FX mortgages at discounted exchange rates.

Central bank head András Simor said he had no proof that there were speculative attacks on the currency, but added that speculation is a normal market activity. He added that speculative attacks are generally taken against countries with weak fundamentals, so Hungary should learn lessons from the current situation.

Base rate (%) Source: MNB

ECONOMY OECD sees economy shrink -0.6% Hungary’s economy will contract by 0.6% in 2012, the OECD said in its fresh Economic Outlook.

The government recently revised its growth forecast to 0.5%-1% in 2012, down from the previous forecast of 1.5% growth in the budget bill. The OECD said the “mild recession” in 2012 would result from a fall in business and consumer sentiment, tight bank lending and financial conditions, ongoing deleveraging of the corporate and household sectors, and major fiscal consolidation. “Strengthening the credibility and predictability of domestic policies, notably through an agreement with multilateral organizations, is of utmost importance to regain investors’ confidence, cushion the effects of fiscal consolidation on activity and return to sound growth,” it said. The OECD puts Hungary’s general government deficit at 3.4% of GDP in 2012, well above the government’s 2.5% target. For 2011, the OECD expects 1.5% GDP growth and sees the country’s general government running a surplus at 4% of GDP, including the transfer of private pension fund assets to the state earlier this year.

GKI-Erste confidence index rises Economic think-tank GKI’s combined monthly index of business and consumer confidence in Hungary, prepared jointly with Erste Bank, rose to minus 23.2 points in November from minus 24 points a month earlier. The seasonally adjusted index stopped declin-

ing after falling for more than six months. Within the composite index, the business confidence index improved 0.9 points, while the consumer confidence index rose 0.3 points. The business confidence index improved thanks to service companies as their expectations returned to September’s level. Service companies’ opinions on current operations worsened but were more than offset by expectations for higher future turnover. Industrial expectations slightly worsened due to deterioration in the assessment of production in the past period and in that of the order stock, including exports. On the other hand, the assessment of stocks and the production outlook improved.

The construction sector confidence index was stable after improving in October, with no change in the assessment of the order stock.

Investigation forint attacks The government has asked the National Security Office and the National Security Service for assistance in finding out who is behind possible speculative attacks on the forint, according to government spokesman András Giró-Szász. It has become clear to the government that speculative attacks took place or may have taken place from the events of the past weeks, Giró-Szász said. The large scale of foreign currency-denominated debt in Hungary makes the forint especially vulnerable to outside intervention, he noted. The government must take steps not only to protect the forint from speculative attacks but also to discover the parties behind these attacks. Hungary’s forint weakened to an all-time low against the euro on 14 November.

NUMBERS POLITICS

in the news

52%

of all Hungarian residents are in debt, with 45% of households owing money to banks. About 800,000 families held one loan each, nearly 500,000 families had two, and 400,000 families had three or more loans.

More than 100,000 families owe money to private individuals.

7.24% The average yield at the six-week T-bill auction of the Government Debt Management Agency (ÁKK) on November 28, up from 6.63% at the previous liquidity bill auction held on November 21. The auction was the first since Moody’s downgraded Hungary to junk status, maintaining a negative outlook.

Opposition calls on EcoMin to quit The opposition Socialist leader has called on Economy Minister György Matolcsy to step down immediately.

Attila Mesterházy told journalists that it was high time that Matolcsy resigned. “We must cut off Victor Orbán’s right hand,” said Mesterházy, referring to the prime minister’s earlier description of Matolcsy. The opposition party’s demand came after Moody’s cut Hungary’s sovereign rating below investment grade. Mesterházy said that the Socialist party’s demand that the minister quit was triggered by Matolcsy’s statement that Hungary’s economic fundamentals did not justify the rating agency’s downgrade and the country was “far from a crisis”. The Socialist leader said Hungary was in a great amount of trouble, as evidenced by “the record high2 cost of insuring its sovereign bonds. “The country has been led into far greater chaos now compared to its extent in 2008-2009,” he insisted. He said one positive sign was that the government had entered into talks with the IMF, but at the same time the Socialists believe that an agreement must be reached as soon as possible, and that credible politicians were needed.

Mesterházy added that this applied “neither to Orbán nor to Matolcsy”.

Fidesz nominee wins 2nd district Voters in the second round of a byelection held in Budapest’s up-market second district selected Fidesz district mayor Zsolt Láng to represent them in parliament on November 27. Láng won the ballot with 58.45% on a turnout of just over a third of all eligible voters in the district. In the first round

Láng secured a majority but turnout at 39% was too low for the result to be declared valid. The by-election had to be called because MP István Balsai, representing the second district’s 50,000 voters in parliament, had been elected in June as constitutional judge, a post that is incompatible with being a lawmaker.

Opposition parties fielded big guns in the hope of unseating Láng, who has headed the second district’s municipality for the past five years. In the Sunday ballot Katalin Lévai of the Socialists came second with 30.55% and Gergely Karácsony of LMP third with 6.45%.

DOMESTIC Plaza building restricted A general ban on constructing commercial buildings with an area larger than 300 sqm or extending the existing facilities to exceed this limit has been approved by parliament. Exemptions from the ban can by granted by the economy minister. The regulation, to be launched on January 1, 2012, will remain in force until December 31.

Govt to set up new secret service The Hungarian government is reportedly planning to establish a new secret service, which will have direct, mostly electronic access to all databases available in Hungary. The National Information and Criminal Analysis Center (NIBEK) is planned under a package envisaging amendments to dozens of laws, including those on police, national security, air transport, sports, media and compulsory car insurance.

Under the amendments all institutions, organizations and foundations with a database will be required to provide the fullest possible information, newspaper Népszava reports.

WWW.BBJ.HU

Budapest Business Journal | Dec 2 – Dec 15

NEWS FOR THIS PAGE IS FROM THE BUDAPEST BUSINESS JOURNAL’S DAILY BRIEFING, HUNGARY A.M.

COMPANY news RAIFFEISEN NOT TO EXIT HUNGARY Raiffeisen Bank may pull out from one or two countries in the region, but it sees no reason to leave Hungary, CEO of the Austrian banking group Herber Stepic said at a press conference in Vienna. Any such pullout would be from a market generating little revenue and where the longterm outlook for development is weak, he said.

Hungary is not among these markets for the time being, he added. Raiffeisen Bank booked a €286 million loss in Hungary in Q1Q3 and “significant recapitalization” will be necessary in the country in Q4, Stepic said.

Losses in Hungary are expected to reach €320 million for the full year, and at least this amount must be recapitalized.

Losses in Hungary are in large part due to €373 million in provisioning and €33 million for the bank levy. Operating in the macroeconomic and political environment in Hungary presents “a big challenge”, the bank said. Raiffeisen Bank’s Hungarian unit is undergoing a restructuring that includes a selective reduction of the portfolio.

NEWS 3

Moody’s Investors Service has downgraded seven Hungarian commercial banks, in connection with the downgrade of Hungary’s sovereign rating. Banks involved in the downgrade are FHB, MKB Bank, OTP, OTP Mortgage Bank, K&H Bank, Budapest Bank and Erste Bank.

FORMER FORUM HOTEL TEL TURNS 30 The Budapest Hotel InterContinental has celebrated ated its 30th anniversary. The fivevestar hotel, located on the famous mous row of hotels along the Pestt side of the Danube, was formerlyy known as the Forum Hotel, and was among the first built in the beginning of the 1980s on the he banks of the river. In 1997, the then Duna Inter-Continental al was privatized and became the Marriott Hotel, while the InterterContinental hotel chain bought ught the former Forum Hotel for HUF 7.5 billion and renamed it the he Budapest Hotel InterContinental. ental.

Fitch Ratings affirmed Hungarian oill andd gas company MOL L’s llong-term foreign and local currency issuer default ratings (IDR) at ‘BBB-’ with stable outlooks, and short-term foreign and local currency IDRs at ‘F3’. Fitch also affirmed MOL’s senior unsecured debt’s foreign and local currency ratings at ‘BBB-’, including its €750 million 2015 bond and €750 million 2017 bond.

The Sultanate of Oman has purchased Budapest’s Four Seasons Gresham Palace Hotel through its State General Reserve Fund (SGRF) for an undisclosed price, website turizmusonline.hu writes.

Canada’s Four Seasons Hotels will continue to operate the 179-room luxury hotel. The Gresham Palace, one of Budapest’s finest Art Nouveau buildings, was renovated and converted into a luxury hotel at a cost of €100 million. The hotel opened in 2004.

Hungarian oil and gas company MOL plans to spend almost €10 million next year to expand its presence in Slovenia. MOL hopes to grab at least 10% of Slovenia’s retail fuel market. MOL entered the market in Slovenia as a wholesaler in 1996, and started its own network of petrol stations in the country in 1998. With the acquisition of 19 petrol stations from TUS in 2011, MOL’s network became the third largest in Slovenia.

Shares of Hungarian building materials company Masterplast were listed on the Budapest Stock Exchange from November 29, 2011.

Masterplast hopes to tap the market for capital in the first half of 2012, depending on market conditions, the company said. It wants to use the fresh capital to expand production capacity.

Shares of Optisoft, a developer of software for the healthcare industry, were due to be floated on the Budapest Stock Exchange on December 1, after its listing request was approved by financial market regulator PSzÁF. Optisoft, which has net assets of about HUF 1 billion, will issue 215,700 shares with nominal value of HUF 1,000 apiece. Optisoft had net income of HUF 80 million on revenue of HUF 397 million in 2010.

Mineral water company and asset manager FuturAqua has submitted an application to list its shares on the Budapest Stock Exchange.

FuturAqua owns two mineral water wells from which several hundred million liters of water a year are bottled for its business partners. The company wants to build packaging capacity at its base within two years.

Hungarian energy supplier and trader Alteo has sold a total of HUF 571.04 million in three-year bonds in a public offering, accepting all subscriptions. Alteo offered at least HUF 150 million of its 2014/D three-year bonds in the offering.

The Government Debt Management Agency (ÁKK) submitted a request for the delisting of all Hungarian state bonds and discount T-bills from the Budapest Stock Exchange, ÁKK said in an announcement.

h d l ld take k place l on January 2, 2012, according d to the h request.

The delisting would The last day of trade in the securities would be December 30.

Pannunity, the new majority owner of listed plastics company Pannunion, has acquired all outstanding Pannunion shares after exercising its squeezeout option on October 27. Pannunity obtained 98.8% of the voting rights of Pannunion as a result of a public purchase offer in October.

Magyar Telekom will become the first company in Hungary to launch interactive satellite television in December, Chairman-CEO Christopher Mattheisen said at a press conference. Magyar Telekom was due to offer the services from December 1. The company has more than 270,000 satellite television subscribers, about 200,000 IPTV subscribers and 220,000 cable TV subscribers.

Germany’s Gustav Wolf has laid the cornerstone of a €3.5 million wire factory in the Miskolc Mechatronics Industrial Park (northeast Hungary). It is expected that the plant will be inaugurated in 2012, and will employ 50 people.

Danish pump maker Grundfos will build a HUF 9 billion plant in Székesfehérvár, its fourth in Hungary. Grundfos will spend about HUF 4 billion to build the 15,000sqm plant in 2012 and 2013 and a further HUF 4 billion-5 billion on equipment in the coming years. About 400 people will work at the plant by 2015.

The local council-owned Paks Industrial Park has laid the cornerstone of a HUF 450 million business incubator. The 2,500 sqm incubator will have room for 8-10 small businesses. European Union funding is covering 40% of the investment costs.

Hungarian chemical company BorsodChem has inaugurated a HUF 335 million clinic in the city of Kazincbarcika (northeast Hungary) in which the company is located. The 500 sqm clinic has capacity to treat 90-100 people per day. The institution is primarily designed for company employees, but is also open to local inhabitants unaffiliated with the company.

Hungarian national carrier Malév will get a HUF 4.2 billion owner-loan to cover its short-term financing, the Hungarian National Asset Management Company (MNV) has announced. The three-year loan must be repaid in a single lump sum upon maturity. Malév’s capital was last raised, by HUF 18.5 billion, on a decision taken at a general meeting on August 23.

The government will inject HUF 60 billion in capital into the state-owned Hungarian Development Bank (MFB) to help the bank and MFB group carry out operations, a government resolution published in the Official Gazette Magyar Közlöny shows. HUF 6 billion of the capital injection will increase MFB’s registered capital, while the remaining HUF 54 billion will go into the bank’s general reserves.

4 TRENDS

WWW.BBJ.HU

Budapest Business Journal | Dec 2 – Dec 15

TELCO

SOCIETY

LABOR

PRIVATE EQUITY

Mobile banking

A good death

It’s a man’s world

Negative attitude

Men are usually more popular both as bosses and colleagues.

Hungarian companies are wary of private equity investors.

There is still room for growth in the use of phones for banking.

More people reject euthanasia than two years ago.

43% 20% 48% 0.07% of Hungarians only use mobiles to communicate

of Hungarians reject any form of euthanasia

of men prefer a male boss to a female

level of private equity investments in 2010

According to a survey of its the clients by Aegon Magyarország, only one-third of Hungarians use their mobile phones for banking. Most people still use mobiles for communication only.

Only 30% of those queried have a subscription that allows both data and voice communication services, 46% have only voice-based communication subscriptions, while nearly one-quarter use a pre-paid phone card.

Among those polled, 62% did not know what kind of operating system runs on their phone. Those who care seem to prefer Android, which has the highest share (31%), followed by Nokia’s Symbian (24%), whereas the iPhone IOS came in last.

However, if people were to change phones, 16% would opt for an iPhone and 23% would purchase one with an Android op system. One-third are uncertain about what kind of operating system they would use, while one-fifth of those surveyed do not plan to buy a smartphone at all.

When it comes to financial transactions, the picture is unclear. Nearly onethird of people have already paid something via phone, but the use of netbanks is far from widespread: only 10% use their phones for banking.

In an international comparison, Hungary is not among the most open to mobile technology. With 85.3% mobile penetration (adult population) and 13% smartphone penetration, the country is only in the middle of the pack in the Central European region. In comparison, in the US, 43% of people own a smartphone, and this share increased by 5 percentage points in the last quarter.

Three-quarters of Americans use their phone for emailing and more than one-third search for goods with the help of advertisements they receive. As opposed to Americans, who use their phone for work, Hungarians use their mobile devices largely for private purposes. ZsV

Although the majority of Hungarians still accept the practice of euthanasia for terminally ill people, the number of those who do not has jumped in the last two years.

Compared to a study carried out two years ago by Webbeteg.hu, this year’s survey shows that more people have a definite opinion now than in 2009. This time, only 10% of those queried refused to answer the questions of the survey, while back in 2009 this proportion was 18%.

Euthanasia has been, and still is, a controversial issue all over the world. It is categorized in different ways, mostly from legal aspects. But from a technical point of view, two forms of euthanasia exist: one is called passive euthanasia, when medical treatment is withdrawn with the intention of causing the patient’s death – for example, turning off life-support machines. The other is the active form of assisted suicide, when specific steps, such as a deliberate overdose, are taken to cause the patient’s death.

The majority of respondents said they agreed with passive euthanasia only, while 31% also supported active euthanasia. In 2009, the proportion of people supporting passive euthanasia was 39% and of those backing active euthanasia was 27%.

The most prominent finding of the survey is the change in the number of people who reject any form of euthanasia: the proportion grew to 20% in 2011, up from 13% in 2009.

The survey came out shortly after news broke in the media that a hospital in Budapest has been allegedly practicing active euthanasia. A police investigation has been launched for allegedly administering morphine overdoses. Another case that stirred up the Hungarian public in 2002 involved a nurse who gave lethal injections to patients in the last stages of cancer. The nurse was sentenced to 11 years in prison for practicing active euthanasia. She was released after six years. PF

Hungary’s job market is male-centric – an often-heard statement that has just been confirmed by a recently published Randstad survey. According to the latest Workmonitor, which involved questioning nearly 3,000 employees and employers in Hungary, 61% of men queried have male superiors, and 46% of women work with male bosses.

Still, almost half of the women questioned said they preferred working with a male manager to a female. Altogether, 48% of men and women said they would work with male superiors if they had a choice. Only 23% of women and 20% of men said they would want to work with female bosses.

When it comes to choosing colleagues, 54% of women said they preferred working with men, and only 27% fancied the idea of sharing an office with female co-workers.

Men also favor male colleagues – 41% would work with men and 33% with women.

When the survey addressed the issue of a balanced male-female ratio at workplaces, it turned out that neither employees nor employers think a healthy balance was important. Only 27% said that a company could perform better if it employed the same number of men and women, while 80% think that when an employer wants to hire a new executive, the number of men and women in management is not an issue to consider.

“Employers are paying less attention to gender issues; the choice is based on performance and the professional experience of the candidates, regardless of their gender,” Erika Sinka of Randstad said.

But it seems that male dominance in the workplace is here to stay at least for a while: 81% of men and 74% of women think that work performance would not improve if the number of women was increased at a company. PF

While private equity investors are actively seeking investment targets in Hungary, local business owners are suspicious about this financing option, as they fear that investors might want to take over the management of their businesses or even the entire company.

Based on a recent study by Ernst & Young, private equity-owned businesses in Europe outperform public companies. Private equity investors currently have $125 billion to spend in Europe alone.

“There are potential target companies in Hungary, but when we start negotiating, they get scared because they misunderstand the intentions of financial investors,” Ernst &Young partner Balázs Tüske said. Investors also shy away from the transparency required by the inevitable evaluation process. Tüske hopes that investments made by the Jeremie funds in the form of startup capital will create a good deal flow in the next two to three years.

Private equity has been present in Hungary for several years, with an activity rate that has been above the regional average in the past, Tüske said. However, the level of private equity investments, at only 0.07% of GDP in 2010, has not yet returned to its precrisis levels in Hungary.

According to the 2011 Global Venture Capital and Private Equity Country Attractiveness Index, Hungary was ranked 40th on a list of 80 countries.

In taxation, Hungary was ranked 12th; however, it would not be healthy to base a country’s strategy to attract investors on just a favorable tax system. Hungary has to develop in all the other areas, including economic activity, depth of capital markets, investor protection, corporate governance, human and social environment as well as entrepreneurial culture and deal opportunities. The Hungarian Venture Capital Association is working together with advisors to prepare a position paper highlighting key areas for improvement. GL

THE ATTACK OF THE ANDROIDS

MATTER OF LIFE OR DEATH

GENDERALLY EQUIVALENT

LITTLE CAPITAL

What do Hungarians use their cell phones for? (%)

Share of phone operating systems in Hungary

do not support any form of euthanasia

Would a company perform better if the ratio of men and women is equal?

MEN

absolutely agrees

agree with passive euthanasia only agree with active euthanasia too

agrees WOMEN disagrees

not answering absolutely disagrees

do not know what euthanasia is

source: AEGON Magyarország

Results of a survey on the social acceptance of euthanasia in 2011 Source: Webbeteg.hu, Szinapszis Kft

Source: Randstad

PE investment (%of GDP) Source: EVCA CEE Study 2010

WWW.BBJ.HU

DOMESTIC 5

Budapest Business Journal | Dec 2 – Dec 15

Political apathy reflected in polls With the governing Fidesz-KDNP coalition becoming less popular among Hungarians, the opposition – although to varying degrees – has gained ground in the last one and a half years.

The governing coalition has maintained its lead, but the number of its supporters among the entire population has nearly halved since the elections in the spring of 2010. A Tárki poll this November shows that, for the first time, far-right party Jobbik has overtaken the largest opposition party, the Socialists, both among decided voters and in the entire population. In the meantime, people are getting less interested in politics: all pollsters have returned results showing that the turnout rate for a potential election today would be below 50%. Another poll revealed that Prime Minister Viktor Orbán is no longer the most popular politician: after leading the list for 15 consecutive months, three of his fellow party politicians came ahead of him in popularity this October. BBJ

POPULARITY OF VIKTOR ORBÁN

POPULARITY OF PARTIES (AMONG ALL VOTERS, %)

Source: Tárki

(Among all voters, %) Source: Medián

Building hope for the hopeless An old worker’s hostel in Veszprém is being turned into a social housing center, providing people in need not just with a home but also a prospect for improving their lives.

BBJ ZSÓFIA VÉGH

On December 8, temperatures in northwestern Hungary will be around freezing at night, according to the weather forecast. That is not remarkably cold – unless you have no heating.

That is the prospect in store at 1 Házgyár utca in the city of Veszprém, a block of flats where the gas was turned off years ago. The reason?

The residents did not pay their bills. Likewise, power was also cut off in many flats, which means several families in the block are once again facing a harsh winter.

Starting this month, they will at least have a place to warm up. On December 8, the Hun-

HABITAT AGENCY Habitat for Humanity, an international organization building, rehabilitating and renovating simple, decent houses for people in need, also hopes to establish a new system to address the social housing problem, using private flats as social rental units. Habitat estimates that approximately 1,2 million live in substandard, unhealthy or sometimes life-threatening conditions. Habitat would guarantee determined costs for renters. The Social Housing Agency (SzOL) would function as a real estate agency, property manager and, if necessary, an employment agency (to give work to avoid indebtedness). Habitat, together with Városkutató Kft, a research firm, plans to introduce the system in the next two years.

garian Maltese Charity Service (MSzSz) will open its daytime warming center in the same building. The 150 sqm space features a kitchen, a laundry room, a sitting room, washrooms and a play area for the kids. This is just another step in an ongoing project turning derelict buildings into temporary homes for many who cannot afford a place of their own.

PUBLIC HOME PROGRAMS Currently there are 135,000 social tenement flats in Hungary, but there is demand for double that number. Ever more households have trouble paying their bills: in the past year, 20% failed to do so and 6% made a late home mortgage payment, a Tárki survey reveals. In the EU, Hungary leads the field in the number people falling behind with their mortgage installments.

Their number, along with that of those unable to pay off mortgages, is likely to increase next year. The government will reintroduce home subsidies for families with children and plans to provide an interestrate subsidy for forint home loans in 2012. The government expects to disburse grants to 4,000 families next year, and expects 3,000-5,000 families to take advantage of the interest-rate subsidies.

Also, the government plans to its expand home-creation program to civil servants, pensioners, fresh graduates and young couples with low salaries. In the program, 5,00010,000 social homes would be built annually. Half of the HUF 80 billion investment would be financed by EU funds and half by low interestrate loans. Loans could be repaid from rents, meaning the government would not have to finance the program eventually. Rent would be around HUF 1,000/sqm.

TOWER OF HOPE

BUILDING SHELVES

The Veszprém Tűztorony, also called the Infernal Tower, is a building with a past.

Originally, it served as a worker’s hostel, but fell into disrepair. It was an unattractive tenstory building comprising temporary dwellings of 17 and 34 sqm each, with no lavatory or bath. Roma families, who lived eight people to a 17 sqm room, occupied most of the flats. This changed a year ago, when MSzSz, which runs all the cities’ shelter homes, bought the majority of the flats and started to renovate them level by level.

In somewhat more than a year, MSzSz has rebuilt three stories, rewired the electricity and resumed gas heating in the renovated parts. The project is being financed from HUF 65 million provided by György Soros’s Open Society Institute, HUF 50 million of MSzSz’s own resources and HUF 35 million from the Veszprém local government. In return, they can delegate tenants to 10 renovated flats.

MSzSz is looking on the program as a pilot project: if successful, it will have found a model to reverse substandard housing and prevent homelessness. The plan is to renovate every flat and offer decent social housing to those in need. Many of the flats will be renovated in an environmentally and socially sustainable manner. The partner to create these solutions is MOME EcoLab, a research group in sustainability initiated by the Moholy-Nagy University of Applied Arts in 2010. It brings together architects, object and landscape designers, economists, sociologists, and media professionals to work on projects.

MOME EcoLab has worked out a number of interior and furnishing ideas for the tower block. One addresses the problem of dividing small spaces. A ‘tube’ placed in the center of the flat divides 17 sqm into five separate rooms: a hall, a sitting room, a kitchen and a bedroom. Within the tube is the water block: the shower and the toilet.

Another innovation is designed to cut furnishing costs by providing only the blueprints for the furniture and having residents build it themselves in a carpentry workshop set up in the communal space. This is where the social element comes into play. “Making their own furniture, residents not only save money but also acquire new skills that may help them find a job in the future,” said Dániel Barcza, head of MOME EcoLab and the design faculty of the university.

The members of the lab have provided several other plans for MSzSz to select from. “We will make a one-to-one paper model of each, set them up in the building and let residents vote on the one they like the best,” said Norbert Lőrinc of MSzSz. Social and financial sustainability is present in the organization’s approach too.

All meters function with prepaid cards to avoid building up an overdraft. Only residents who pay the common costs can use the elevator, which was out of order for seven years. Sounds like a good idea.

If all works out well, the former Infernal Tower, now renamed the House of Reception, could serve as a model for future social housing rehabilitation projects.

THOUSANDS OF HOMELESS A social housing program for homeless people should also be introduced, according to Zoltán Aknai, director of Menhely Alapítvány, a foundation dedicated to helping homeless people. As of today, three state-subsidized accommodation types are available for the homeless: night shelters, temporary hostels and homeless people’s care centers. Only the first option is free of charge. A more thorough support program must be set up, as out of the 7,000 homeless people living in Budapest, 1,500 have no place at any of the three housing options above. A social housing program, which supplemented rents paid to rented flats, will be discontinued from next year due to lack of funds.

6 ECONOMY

WWW.BBJ.HU

Budapest Business Journal | Dec 2 – Dec 15

Downgraded despite U-turn The Hungarian government said it suspects speculative attacks against the country are behind the recent downgrade of the country’s credit rating by Moody’s.

WHAT COULD MOVE THE RATING UP OR DOWN?

UP

BBJ GABRIELLA LOVAS

Despite Hungary’s request for assistance from the IMF and the EU, Moody’s downgraded Hungary’s government bond rating on November 24 by one notch to Ba1 from Baa3, and is maintaining a negative outlook.

This puts Hungary’s ratings in non-investment grade, or ‘junk’ status, while the two other major rating agencies, S&P and Fitch, have Hungary rated at BBB-, the lowest investment grade rating, with negative outlooks.

S&P placed Hungary’s ratings on CreditWatch Negative in November, but this will remain in place longer than expected, probably until February, as the agency said it would assess the progress of talks with potential lenders before making a decision on whether to downgrade.

Moody’s noted that Hungary’s recent requests for assistance from the IMF and the EU reflect the funding challenges facing the country. However, the agency believes that, even with an IMF arrangement, the government’s debt structure will remain vulnerable to shocks in the medium-term, which is inconsistent with a Baa3 rating.

Moody’s would consider stabilizing the outlook on the government’s Ba1 bond ratings if the country were to embark on a sustainable consolidation path, involving a more consistent implementation of the medium-term plan and the Convergence Program – possibly supported by a resumption of robust economic growth – which would stabilize government financial strength on a sustained basis.

DOWN Moody’s would consider a further downgrade if there is a significant decline in government financial strength due to a lack of progress on structural reforms and implementation of the medium-term plan. Lasting exchange-rate pressures or rising financing costs could accompany such a decline.

BACK TO THE IMF This must have been a bleak moment for the prime minister. Not long ago, the government boasted about throwing out the IMF in the name of a “war for financial independence”. Hungary returned to market financing in the fall of 2009 and Viktor Orbán announced in the summer of 2010 that the country would not renew its standby arrangement with the IMF. The problem with market financing is that it is getting more and more expensive, in line with eroding market confidence. This has been reflected in a substantial increase in yields in 2011, resulting in a higher cost of debt on new issuance. In the wake of rising yields and the rapidly weakening forint came the surprise announcement that the government would seek to start talks on a new agreement with the IMF.

THE KEY DRIVERS FOR THE DOWNGRADE AND NEGATIVE OUTLOOK: 1. Rising uncertainty surrounding the country’s ability to meet its medium-term targets for fiscal consolidation and public sector debt reduction, particularly given Hungary’s increasingly constrained medium-term growth prospects.

2. The increased susceptibility to event risk stemming from the government’s high debt burden, heavy reliance on external investors and large financing needs as the country enters a period of heightened external market volatility.

Source: Moody’s

In a weak attempt to save face, the economy ministry called the agreement “a new type of cooperation” which would increase Hungary’s financial and economic independence instead of hindering it like the old one. How an agreement with the IMF –with its strict, regular, quarterly reviews – could increase independence remains a mystery.

Among the types of agreements available, Hungary has the option to choose from a Precautionary Credit Line or a Precautionary Standby Agreement, whichever is more flexible, said economy minister György Matolcsy. “This new type of cooperation, unlike the old one, would not increase government debt as we will not take out a loan, but we will sign an insurance contract in order to increase the safety of investors in Hungary,” the ministry said in a statement. The IMF led a €20-billion assistance package for the country at the height of the crisis late in 2008.

LOOKING FOR SOMEONE TO BLAME Since the announcement of the downgrade, the government has been working hard – on finding someone to blame. After a meeting with leading Hungarian economists, Matolcsy stated that Hungary’s fundamentals just did not justify the downgrade. “In terms of financial stability, Hungary belongs to the best countries of the EU, and this perception is shared by the European Commission, the IMF delegation and the National Bank of Hungary,” he said.

So, this must be something else, then, he concluded – a mysterious speculative attack against the country, maybe? The search is on for a scapegoat – again.

Nevertheless, the government now aims to outline a new economic growth plan to acquire a financial safety net, as well as start cooperation with the Hungarian Banking Association.

Some might argue it’s about time.

A LOOK AT FUNDAMENTALS No matter how confident Matolcsy seems to be about Hungary’s fundamentals, Moody’s argues that there are mounting uncertainties surrounding the government’s ability to meet its targets. The agency’s analysis appears spot-on.

Moody’s has revised its growth forecast for 2011 and 2012 to 1.5% and 0.5%, respectively, down from the previous 2.7% and 2.6%. The agency attributes this to weak domestic demand and structural constraints such as high unemployment and low labor participation. Among external factors, Moody’s cited the weakened growth prospects of Hungary’s main trading partners, particularly Germany.

Moody’s believes that the banking system’s ability to assist growth by extending credit will be constrained by rising non-performing loans, recent government measures, as well as the reduced ability of foreign par-

ent banks to provide liquidity to their Hungarian operations.

Although the government has committed to reducing general government debt to 50% of GDP by 2018, its medium-term strategy to achieve this goal remains unclear, according to Moody’s. Reliance on one-off measures, such as the liquidation of pension funds assets, will not improve debt sustainably in the long-term. Moody’s pointed out that Hungary’s general government debt ratio at 81% of GDP in 2010 is already higher than the Baa3 median.

While the 2012 budget targets a headline deficit of 2.5% of GDP through a combination of structural reforms and ad-hoc revenue-generating measures, Moody’s believes that the government’s ability to achieve these targets will be constrained by higher funding costs and a low-growth environment.

The country’s vulnerability to external shocks derives from the government debt structure, which could in turn expose the government to funding cost pressures, Moody’s pointed out. Approximately, 64% of general government debt is held by non-residents, of which two thirds is denominated in foreign currency. The country’s general debt dynamics are already strongly affected by the weakness of the forint, and uncertainty over the effectiveness of economic policy could further erode market confidence.

Moody’s noted that the banking system and the private sector also carry substantial external debt, adding to the country’s vulnerability to adverse foreign exchange rate movements.

At an expected 131% of GDP in 2011, Hungary’s external debt is very high, relative to the Baa3 median. ■

WWW.BBJ.HU

ECONOMY 7

Budapest Business Journal | Dec 2 – Dec 15

What are you doing about the eurocrisis?

Hungarian businesses are not yet ready to think the unthinkable.

BBJ GABRIELLA LOVAS

“Don’t talk of the devil.” That was the reaction of most companies when asked by the Budapest Business Journal whether they have a contingency plan for the partial or complete breakup of the eurozone. They were either puzzled –shocked even – or said that such a thing would not affect the sector they operate in. Sadly, they are probably mistaken there.

As a small, open economy, Hungary is extremely vulnerable to external shocks. The escalation of the eurozone debt crisis would pose serious risks to Hungarian businesses due to the country’s deep integration with western European markets. The BBJ believes that preparing such a contingency plan is not such a wicked idea and might even be prudent. Let’s just hope that in the end, it turns out to be an unnecessary precaution.

According to The Economist, such planning is not just a matter for companies in threatened economies on the periphery. “Even a partial breakup would be catastrophic for companies throughout the eurozone, and pretty dire elsewhere in Europe’s single market. New currencies would have to be introduced. Panic would seize the banks on which companies depend for funding. Economic growth would hit a wall,” wrote the paper.

As the Chinese proverb says, the more you sweat in peace, the less you bleed in war. The more prepared a company is now, the less its business will be thrown into disorder in a crisis.

VIDEOTON: THINKING ABOUT THE SHOULDN’T-BE-THINKABLE It is a serious question whether a responsible business should prepare contingency plans or not, Ottó Sinkó, co-CEO of industrial group Videoton told the BBJ. On one hand, such a plan could in itself raise havoc. The more significant the market player that prepares the plan, the higher the probability is of the given scenario becoming real. On the other hand, in case a business starts contemplating low-probability contingency plan, it will be unable to make optimal decisions.

The Videoton group is one of those Hungarian companies that live in symbiosis with the economy of the EU in more than one area, such as in the automotive sector, Sinkó said. The company’s major markets are among the countries that are not yet threatened by the crisis. Therefore, he does not think it is necessary yet to prepare a contingency plan for a post-euro Europe.

“I believe that conservative operations and thorough risk management are the main strengths of the group,” Sinkó said. “There is not one issue that we would not dare contemplate. Whatever happens, we have to ensure continuous production in line with current demand and adapt to the changing conditions as quickly as possible.”

He believes that Videoton is prepared for the deepening of the crisis, should this happen in Hungary or abroad. First of all, the group has significant liquid reserves. As its stock of deposits considerably exceeds the stock of loans, a significant decrease in liquidity would have a lesser impact on the group.

In addition, the sector the group operates in adapts quickly to changes in customer demand even during ‘peacetime’. The company has further developed this ability during the 20082009 crisis. “Therefore, we can react to possible negative changes from a better than average position,” he added.

NORDTELEKOM: EFFICIENCY ENHANCEMENTS A partial or total breakup in the eurozone would only indirectly affect the operations of NordTelekom, chairman of the board Mihály Gácsi told the BBJ. As a result of the economic downturn, solvent demand could drop, even for internet services, the cheapest form of entertainment available for almost anybody.

NordTelekom, as a public company listed on the Budapest Stock Exchange, has continuously improved the efficiency of its operations since the beginning of the crisis in order to be in a sound financial position and be better prepared in case of the escalation of the crisis.

NordTelekom continuous to examine potential company and client acquisition targets in the telecom sector, as further consolidation is expected in Hungary’s telecom market in the wake of the economic crisis, says Gácsi. To finance further business developments, the owners of NordTelekom decided to launch a maximum HUF 900 million bond program in October. NordTelekom recently purchased the clients and assets of telecommunications company Beltáv. ■

8 BUSINESS

WWW.BBJ.HU

Budapest Business Journal | Dec 2 – Dec 15

THE FIVE PROJECTS Although one of the big international rating agencies has just downgraded Budapest following the rating of Hungary’s debt to junk, the Hungarian government is determined to upgrade the capital – at least from a property development point of view. In the next four years, several large-scale projects are to be realized in the capital. Plans include the full restoration of the Castle district, the construction of a new football stadium, establishing and building a public service university, and creating a museum quarter in the heart of Budapest. The projects require a total budget of about HUF 70 billion, to be funded partly from EU sources and partly from the central budget. Some of the projects are slated for delivery after 2014, when the current government’s term is up. Let’s just hope that this time, the ambitious plans will not fall foul of the next government.

VÁRKERT BAZAAR Designed by famous Hungarian architect Miklós Ybl and built between 1876 and 1879, the Várkert bazaar at the foot of the Castle Hill has been an eyesore for decades. The bazaar has a hectic history, and during the course of its existence, it has hosted artists’ studios, a historic portrait exhibition and, most recently, the Ifipark, an entertainment park for the youth of the 1960s, and the first of its kind in Budapest. The Ifipark was shut down in 1984, and the condition of the building complex has gone from bad to worse since.

Today the World Monument Fund lists it among the world’s 100 most endangered building complexes.

As part of the long-term development strategy of the Castle district, the Várkert bazaar is about to get a major facelift. The project is part of the national program of the New Széchenyi Plan.

The checklist includes the construction of an underground parking lot for 130 cars, restoration of the Royal gardens, and building an escalator to connect the banks of the Danube with the Palace. The area of the former Ifipark would accommodate “backpacker tourists” in beer tents and cheaper restaurants. The bazaar will also have cultural functions, with some 6,000 sqm of available space for exhibitions. Dedicated to the memory of the popular Ifipark, the complex will also host a museum to introduce the history of Hungarian rock music, the ministerial commissioner responsible for renovation of the Castle district said.

A feasibility study required for improving traffic conditions in the district and its surroundings must be completed by the end of February 2012, and the deadline set in the government decree for drawing up the 25-year development strategy of the quarter is May 31, 2012.

COST: HUF

8.5 BLN

The project is to be financed entirely from EU funds that have already been received.

Delivery date for Várkert bazaar:

MARCH 2014.

〉FINDING THE RIGHT

FUNCTIONS FOR THE BAZAAR WAS THE MOST DIFFICULT TASK says Ferenc Zumbok, ministerial commissioner in charge of renovations of the Castle district.

LUDOVIKA CAMPUS By as early as September 2013, the public administration faculty of the new National Public Service University, planned on the Orczy-kert in District 8, will open its doors. With the merger of the public administration faculty of the Corvin University, the Police College and the Miklós Zrínyi National Defense University, the newly created institution will have public administration, police and military faculties. The old Ludovika Akadémia, once serving as a military academy, currently houses the Museum of Natural Sciences and the Bárka Theater.

In addition to the new university, a college campus, sports facilities and other service establishments will be built on the area. With the reorganization of the above-mentioned educational institutions, two valuable properties will be left vacant in District 12, and additional resources might be available if the National Asset Management Company can sell them.

COST: APPROXIMATELY HUF

20 BLN

partly from EU funds, partly from the central budget.

Delivery date for Ludovika Campus: first phase could be completed by Sept 2013, second phase by Sept 2014, third phase by Sept 2015.

〉THE BÁRKA THEATER WILL

REMAIN IN PLACE, AND THE MUSEUM OF NATURAL SCIENCES WILL ALSO REMAIN OPEN TO VISITORS DURING CONSTRUCTION says Balázs Fürjes, government commissioner in charge of the Ludovika project

WWW.BBJ.HU

BUSINESS 9

Budapest Business Journal | Dec 2 – Dec 15

S WE ARE WATCHING FRADI STADIUM

The Hungarian state is currently in negotiations with Kevin McCabe, the Scottish businessman owner of the Fradi stadium who bought the facility in 2008. McCabe already has plans for a new stadium, but now wants to exit the project. According to estimates, McCabe has suffered some HUF 8-9 billion in losses up to date, which he hopes to get back from the state in some form. But the government commissioner in charge of the new stadium project has said that McCabe will have to face his losses, although “the state has to consider that he has already made steps for constructing the new stadium.” Talks are expected to come to an end in the coming weeks, and the construction of a new, state-of-the-art, 22,000-seat stadium can hopefully get the green light. According to the plans, the current building will be demolished and the new stadium will be built in the back corner of the plot, leaving a vacant spot right at the corner of Üllői út and Könyves Kálmán körút, which is the most valuable area of the land. This area can later be rented out for private businesses, the government commissioner said. In addition to hosting 30-50 football games a year, the state-owned facility will be rented for various other events, such as concerts, fairs and conferences.

MUSEUM QUARTER A planned museum quarter could reposition Budapest on the cultural map of Europe, Museum of Fine Arts director László Baán, who is in charge of the project, said when announcing the project in October. It is estimated the quarter could be completed by late 2017. Baán said he would submit a detailed proposal to the cabinet by next summer and the HUF 20-30 billion project could begin in 2014. Plans include merging the collections of the National Gallery and the Museum of Fine Arts by February 29, 2012, according to a government resolution published on October 20. However, National Gallery director Ferenc Csák considers the merger hasty, professionally ill considered and harmful for both institutions.

COST: APPROXIMATELY HUF

20–30 BLN

Delivery date for Museum Quarter:

LATE 2007.

〉THE NEW MUSEUM QUARTER

WILL PLACE BUDAPEST AMONG THE CONTINENT’S TEN MOST IMPORTANT CITIES says László Baán, government commissioner in charge of the project

EXTENSION OF THE GÖDÖR The Gödör (also dubbed the “national pit”) is located in the heart of the city on and under Erzsébet tér. This is the area where the Socialist government dreamt of building a new National Theater in 1997 – and construction was halted by the first Orbán administration a year later. After a lengthy dispute between the city hall of Budapest and the government, a decision to build a cultural and conference center was made in 2000. In 2002, the city rented it out to its current operator and the Gödör klub has served as a cultural meeting point since. But there is ample underutilized area, the commissioner said, and the facility also has several construction defaults. The government plans to fix these, and to create a theater area, a restaurant and an event hall, but also wants to keep the current function of the Gödör. It is also dedicated to the undisturbed operation of the place during construction.

12 BLN

COST: APPROXIMATELY HUF FROM THE CENTRAL BUDGET. Delivery date for Fradi Stadium: as early as fall of 2013 or 2014.

〉FRADI IS A TREASURE OF

THE NATION

says Balázs Fürjes, government commissioner in charge of the Fradi stadium project

COST: APPROXIMATELY HUF

1–1.5 BLN

May be covered from EU funds, but no decision has been made.

Delivery date: as early as the

SECOND HALF OF 2013.

〉THE GÖDÖR WAS A SWEAR-WORD ONCE BUT HAS NOW BECOME A CULT SPOT says Balázs Fürjes government commissioner in charge of the Gödör project.

Compiled by Patricia Fischer

10 BUSINESS

WWW.BBJ.HU

Budapest Business Journal | Dec 2 – Dec 15

Learning the Chinese for wine As long as there is no unique reason to drink Hungarian wine as opposed to any other, exports won’t grow much, but winemakers are experimenting by taking a stand in emerging markets.

BBJ ZSÓFIA VÉGH

Selling wine in Hungary is much like selling tea in Great Britain or flowers in the Netherlands. The selection is wide so sellers have to be really smart in order to win people’s attention. The only difference between wine and the other two products is that the latter also have a good reputation outside of their own countries’ borders. They are more than just products; they are distinguished brands that guarantee quality and something more. By sipping a cup of a fine English blend, one also feels part of a larger culture and tradition.

What feeling would a glass of Hungarian wine evoke in a drinker abroad? At present, nothing.

Good as they are, they mean little to wine lovers, and most importantly, offer nothing to stand out in a world now flooded with very good wines.

SOMETHING EXTRA They certainly should. Families usually have a weekly wine budget. A Hungarian wine may look exotic enough to try once, but most of the time people won’t risk spending on unknown wines. So how can you get, say, a Frenchman or an American to reach for a Hungarian bottle on the wine shelf? Excellence in itself is not enough.

You have to give a reason why someone should choose a bottle of Hungarian wine when there is so much choice, where the market is so saturated.

This is the path Izabella Zwack, owner of the Dobogó Winery in Tokaj follows. The cellar makes about 20,000 bottles per year, half of which go in exports to to England, Italy, Poland, Holland, Belgium, Canada, Japan, Hong Kong and the US. Zwack probably is a good storyteller. Having done several business deals in the US, she is now forging business ties with Brazil.

This is a face-to-face business: she either travels to fairs or visits restaurants to have her wines tasted and listed. Owners are grateful to meet and listen to winemakers talking about their wines. How else could they explain to their guests what is special about that particu-

lar bottle? You cannot separate the wine from the hands that made it, Zwack says. That is why she does not favor the practice of assessing a wine solely by its wine-tasting test sheet.

EXPERT DILUTION Csaba Malatinszky, owner and wine-grower of the Malatinszky Kúria Villányi Borászat, is not a fan of wine competitions either. Partly because, as he says, they have lost their prestige due to the dilution of the wine-judging trade, and partly because he finds there is a better way to have wines accepted abroad.

“If an acclaimed wine writer puts your wine on the right shelf, trading partners from abroad will come to you,” Malatinszky said.

Reviews by Tom Stevenson (one of the world’s most respected wine authors), along with titles like the best European wine in 2008 (Decanter) and selection into the Top 100 wineries, have done their job.

Exports of the sophisticated, terroir wines of 1,000 hectoliters account for 25-30% annually. Within five years, Malatinszky would like to increase this to 70%. The winery exports to Japan, England, the US and China, and plans to add Sweden soon. China is especially dynamic these days and it will be a major partner in the future, Malatinszky noted.

ORIENTAL TRADE Hungarian wine exports to China are growing fast indeed. According to the statistics from the foreign ministry, wine exports to China and Hong Kong exceed exports to some more established markets in Europe. In the past two years, the value of exports to mainland China has increased by 300%.

Interest in Hungarian wines was considerable at the Hong Kong International Wine & Spirits Fair this November, even exceeding the popularity of the Portuguese stand, according to winegrower János Konyári. The founder and head of the Konyári Winery has attended the event twice, most recently at the invitation of his Hong Kong trading partner whom he met at the 2009 fair. Beyond Hong Kong and China, Konyári Winery has partners in Thailand and Germany and is looking to start selling to Ukraine.

Both the number of participants and visitors at the fair has increased from two years ago. Admission is free, and anyone who passes the initial wine test can enter. Apparently, it is a great place to offset falling sales in Europe.

Zwack, however, believes China is not necessarily ready for Hungarian wines. “When a country starts to drink foreign wines, they always begin with the big ones such as the Bor-

deaux. Only after that will they discover lessknown regions,” she said. Since now a lot of primers are going to China, it may take time for the transition to be completed.

NEW MARKETING STRATEGY Until then, wineries could benefit from a national export/marketing strategy the lack of which has long been an issue. Unfortunately, not even the restructured parliament committee on wine seems to have arrived at solution for that. Zwack has a strategy.

She would pick one variety – dry Furmint – and would market only that for two or three years. “Not because I come from Tokaj, but because Furmint is growing in popularity worldwide.” Furmint could become Hungary’s Grüner Veltliner or Riesling, she added.

Malatinszky would emphasize small estate sizes and hand-picked vintages. For Hungary, the way to outshine is in organic cultivation, he believes. (Malatinszky Kúria is one of the growing number of Hungarian estates that have gone entirely organic.)

Either of the above methods would help with the goal of putting Hungarian wines on the global map.

“All this takes time,” Zwack warns. “We have to be patient.” ■

Do you have an opinion about the state of affairs in Hungary and the region?

Become a BBJ-blogger by submitting a synopsis (500 words) on what you feel passionately enough about to

share your views.

Email to dmt@bbj.hu

WWW.BBJ.HU

BUSINESS 11

Budapest Business Journal | Dec 2 – Dec 15

Cool shops, hot spending An increasing number of shops are using interior design to lure in customers and keep them there longer.

A hundred meters up from Huckleberry, a store on Andrássy út where you can buy – among other things – Armani Junior for your kids, is Capsula, a new high-end fashion store.

It is called Capsula because it houses the capsule collection, or more affordable pieces, of big fashion houses. The shop’s design is loyal to its name: inside, many of the goods are displayed on white capsules on the walls. If the gentleman in uniform at the door doesn’t scare you off and you summon the courage to enter, a very kind and modest shop assistant guides you through the collection.

Not far away, in the busiest section of Deák Ferenc utca (a.k.a Fashion Street), a recently opened shop stands out of the line of highend brands. It is Vodafone’s Smart Store, a new breed in the mobile store market. Here you can also meet men in uniform at the door, but their

which there are plenty, buzz around the place with tablet PCs in their hands, and come to your assistance whenever you need it.

At first sight, the two shops have nothing in common. Location, maybe. But on a closer inspection, they are more alike than one would think.

They both timed their opening carefully right before Christmas, to take full advantage of irresponsible shopping sprees that are ‘justified’ by the end-year holiday season. With their fancy interiors, they are trying to make people forget about the crisis. The shops suggest they can afford it, and that people can as well. Eventually, their goal with all those elements is to shake up sales. Design is just a means to meet that end.

If a store is unusual, people are more likely to enter: curiosity is always stronger than rationale. Once inside, the owners and designers try their best to keep potential customers in. Vodafone’s concept with its casual gallerycafé ambience is meant to enhance coziness.

An overly modern, sterile environment can be intimidating: people will feel uncomfortable. But if a shop can make you feel at home,

apparel – a pair of jeans and white tees with color print – definitely won’t frighten anyone. In contrast to Capsula’s cold elegance, the Smart Store is warm and vibrating. Red brick walls, huge TV panels, wooden and glass tables displaying phones by brand. Shop assistants, of

you are more likely to stay, thus boosting the chance of a purchase.

A smart but laid-back atmosphere definitely works better than, say, one-stop points where customer service and shopping are not separated. Little wonder that potential shoppers

BBJ ZSÓFIA VÉGH

QUICK Q&A Péter Kucsera, managing and marketing manager of Gepetto Design Studio Q: Can stores with luxurious or unique interior design enhance sales?

A: The fact that there is a recession doesn’t mean that demand for luxury faded. Competition for customers is even greater.

Making design become part of a service is a smart move: it suggests quality and explains price.

Q: Aren’t shops with luxurious interiors intimidating, or exclusive? Don’t they exclude, or frighten off many people?

A: They do, but that is a good thing. Customers of luxury goods not only buy these

products because of their quality. They want to feel there are not too many who can afford it. Should the design of these shops attract everyone inside, it would fail to meet this purpose.

Q: What about a casual and hip atmosphere? What is the purpose of that?

A: Designers create interiors based on desired future shopping behaviors. With electronic or mobile devices, the aim is to make shoppers linger longer. Everything in the design serves that. The more time they spend with a device, the better they get to know it, the more likely they are to buy it. With clothes, it is more like love at first sight. The interior must pressure customers to decide in an instant.

won’t linger in a place where they were summoned because of an unpaid bill or customer service issues. There, shop assistants will approach people differently. In fact, they don’t go over to them: everyone is required to have a number and wait his or her turn: like at the post office or at a bank. In the Smart Shop, the assistant is more like a good mate as he ponders over the mysteries of operating systems like iOS or Android with you.

The overall aim of Capsula on Andrássy út may be the same, but it achieves it with different tools. Imposing shop windows,

large empty spaces, not a customer inside who could give one some pretext to enter.

That is exactly its goal: to filter unwanted customers. While in a fast-fashion chain six to eight shop assistants are at the service of customers, here there are only two. There is no need for more, as they don’t need to handle crowds of people.

So the next time you enter a stylish shop that has Neo-baroque chandeliers and gilded wallpaper, try and guess what shopping behavior pattern you are expected to display. ■

BBJ

FOCUS

STOCK EXCHANGE

BSE TURNS TO FOREIGN SH A NEW ALTERNATIVE PLATFORM LAUNCHED BY THE BSE WILL FACILITATE THE TRADE OF FOREIGN EQUITIES IN THE LOCAL CURRENCY, WITH THE SHARES OF TEN LARGE EUROPEAN COMPANIES INITIALLY AVAILABLE THROUGH THE BÉTA PLATFORM. With market turnover on a continuous decline and increasing state holdings in public firms, there are fresh attempts to breathe life into the Budapest Stock Exchange.

One of these is a new service: the BSE launched trade in the shares of ten western European blue chips on a new alternative platform called BÉTa on November 15. The shares include BASF, BMW, Commerzbank, Deutsche Bank, E.ON, Nokia, Santander, Siemens, ThyssenKrupp and Total.

These stocks were picked because the issuers are well-known in Hungary, they generate significant turnover in their traditional markets and, in the case of European instruments, and trading hours are similar to those of the Budapest bourse. Erste Investment Zrt, the co-developer of the platform, aims to expand the number of instruments traded on the platform to 30 from January 2012.

Trading on the platform is conducted in Hungarian forints, thus the BÉTa market offers access to the equities of several European companies that are issued in a foreign currency without the need to face currency conversion costs. Exchange rates are constantly adjusted to market rates, but dividends are paid in euros.

Erste expects the alternative platform to generate a daily turnover of HUF 1 billion. The BSE said official market makers, who undertake to keep a continuous supply of bid and ask quotes in the order book, ensure liquidity of trading in foreign equities registered on the BÉTa. Market making helps investors find bid and ask quotes in foreign equities at all times, at adequate prices.

Trading hours and periods, trading rules, as well as order types and their expiry on the BÉTa are identical to those applied in the BSE’s equities section. Capital gains attained on the new market are subject to the same tax rates as those attained on BSE’s equity market.

AN ALTERNATIVE CHANNEL Most major Hungarian brokerages, with the exception of Concorde, have joined the new platform. Concorde points out that it has provided comfortable access to trading in foreign securities, in one way or another, for years. As this is not a revolutionary new service, “just another alternative channel” as they put it, market players do not foresee a considerable impact on the market.

KBC introduced its service to trade foreign shares directly online from clients’ existing accounts on July 1 this year, with 600 shares including those of the biggest US and European companies, and has since expanded the number of directly available products to 2,000. Clients can ask for whatever equity they want on the 15

foreign markets offered. As a member of the Warsaw Stock Exchange and the first Hungarian remote member of the Prague Stock Exchange, Equilor is able to provide direct access to the shares listed on those markets, the company said.

DELISTINGS: ORCO AND RÁBA Some new blood is sorely in need on the BSE; in addition to declining turnover, some issuers are set to leave or will likely be delisted, while overall free float is also decreasing as the state boosts its holdings in listed firms.

Orco Property applied to delist its shares from the Budapest bourse because of low trading volumes and to reduce listing and reporting costs. Orco shares will remain listed on the NYSE Euronext Paris, the Prague Stock Exchange and the Warsaw Stock Exchange.

Given its multiple listings, Orco’s exit is not a big loss for the BSE, as 99% of trading usually takes place on the home market. Experts believe that multiple listings are therefore often pointless.

Market players have mixed opinions regarding the future of automotive firm Rába. Some believe that it will be delisted from the BSE in 2012, while others think that a responsible government would keep it on the stock exchange. The Hungarian National Asset Management Company (MNV) made a public purchase offer for Rába in November, saying the government wants to strengthen the state’s role in the automotive industry.

Other public companies are also seeing increases in state ownership. The government acquired a 21.2% stake in Hungarian oil and gas company MOL from state-owned Russian peer Surgutneftegas earlier this year. Added to a stake of around 2.4% it gained through absorbing private pension fund assets, the state-owned stake in MOL has thus increased to 23.6%.

The Government Debt Management Agency’s (ÁKK) 6.13% stake in pharmaceutical producer Richter, together with the MNVs 25.2%, brings the state’s overall holding in the company to 31.33%. The share held by the government in Magyar Telekom also passed the 5% limit requiring an announcement, after the acquisition of the private pension fund assets.

Fortunately for the Budapest bourse there is a segment of companies with about HUF 5-15 billion annual net sales revenues that would be too small to list on a foreign market, but could arouse considerable interest in the Hungarian stock market. Good examples are building materials firm Masterplast, FuturAqua Mineral Water Production and Asset Management Company and IT firm Optisoft, which listed their shares on the BSE at the end of 2011.

WWW.BBJ.HU

FOCUS 13

Budapest Business Journal | June 4 – June 17

▶▶ How did Warsaw beat Budapest? ▶▶ MARKET ANALYSIS&LIST: Investment companies

〉PAGE 14 〉PAGE 15

ARES TO BOOST TURNOVER

BÁLINT SZÉCSÉNYI CEO of Equilor Investment Ltd and new vice-chairman of the BSE The BSE has been seeking alternative uses of its existing trading platform for years with failed attempts to trade in, for instance, gold or oil. The new platform has been launched in response to challenges by the expansion of MTF (Multilateral Trading Facility) platforms. Due to easier and cheaper trading, MTFs are the biggest competitors to organized exchanges.

Market players expect that the market maker will ensure liquidity in the new platform. However, the question is whether investors would prefer using the BÉTa online or through their brokers, as this service has been available at Equilor (and at most providers) for five to eight years.

I would be happy to see the success of the new platform, because I hope that it will also have a positive impact on demand for the Hungarian shares registered on the BSE. Liquidity has dropped in most international exchanges during the past few years due to a decrease in risk appetite. However, the current major withdrawal from both retail and corporate financing by Hungarian banks gives an extraordinary opportunity for new bond and stock issues, such as the bond programs of energy suppler and trader Alteo and telco BTel, as well as the impending listing of Masterplast.

The stock exchange is currently the only way for many businesses to raise funds.

SZABOLCS TAKÁCS KBC Securities business development director

MÁRTON RADNAI CEO of financial software provider Ramasoft, the operator of investment portal netfolio.hu The introduction of the BÉTa market is a good idea, but it will not solve the fundamental problems of the BSE. Given the huge costs of setting up the new platform, I was really surprised that Erste decided to launch it.

The preference for home markets is still strong in Hungary. According to our experience, there is no considerable interest in foreign shares from clients, with only a handful opening accounts suitable for trading in foreign equities, such as Erste Trader and Equilor Trader accounts. One of the main problems is that clients do not have easy access to information about foreign shares. While OTP, MOL and Richter dominate financial news in the Hungarian media, potential investors know next to nothing about Commerzbank.

Another issue is that it will always be cheaper to buy and sell foreign equities in their home markets. Fortunately, Hungarian investors face no administrative barriers at foreign exchanges.

I foresee a breakthrough in the consolidation of the stock exchanges in the CEE in 2012, as the Vienna Stock Exchange is already fed up with the operetta with the BSE. This is reflected in recent changes in the BSE’s board. (The BSE board appointed Michael Bühl, CEO of the Wiener Börse as its chairman and elected Petr Koblic, chairman-CEO of the Prague Stock Exchange to the board of directors.)

Our customers often ask for special instruments, such as the shares of small- and mid-cap North American firms. There is a demand for products that we would not even think about picking during the pre-selection process. One of the sexiest sectors, for instance, was that of Canadian gold mines.

BÉTa will not be able to meet such demand, as it can offer primarily continental European blue chips, thus excluding the biggest UK and US capital markets. Another disadvantage is that the bid-ask spread in home markets is only one-tenth of BÉTa’s spread of about 0.5% on average, so in many cases it can easily turn out that it is cheaper to trade on the home market of the given equity.

Nevertheless, we have joined the BÉTa platform. I think that it can help customers trading only in Hungarian instruments make the move onto trading in foreign equities in the real international home markets, too.

It is the missing political support that is first of all accountable for the lack of real listings on the BSE. The government has lately made the stock exchange out to be something like a casino to be held in contempt. Treating the stock exchange, the hotbed of self-provision, like that could easily backfire, especially in the current demographic situation. I hope that the government will realize that the capital market is not to be witch-hunted.

Another factor to blame for the weak capital market is that Hungarian entrepreneurs are not comfortable with the transparency required by a public company. I suppose that Hungarians were not born corrupt, but the tax system has greatly contributed to making them just that.

WWW.BBJ.HU

14 FOCUS

Budapest Business Journal | Dec 2 – Dec 15

How did Warsaw beat Budapest in the stock market race?

The Budapest Stock Exchange stands no comparison to its Polish peer. Obviously, the Polish market is four times bigger, but this is not the only reason behind the difference, as the BBJ found.

BBJ GABRIELLA LOVAS

The Warsaw Stock Exchange has been one of the great success stories of the region since the collapse of communism. Today, the Polish exchange outranks all other bourses in the CEE, and its biggest rival is the Vienna Stock Exchange.

The WSE operates a regulated market of shares and derivative instruments and an alternative stock market called NewConnect for growing companies. New projects include the development of Catalyst, a market for issuers of corporate and municipal bonds, as well as an energy market. Since November 2010, the WSE itself is a publicly listed company whose shares are traded on the Warsaw bourse.

Rába could become the next company to be taken off the stock exchange as the Hungarian state has purchased a big chunk of it

UPWARD SPIRAL This success of the WSE has brought along with it revolutionary changes in the attitude of Polish entrepreneurs, who have started to

think like Americans, according to György Herczku, head of corporate finance at KBC Securities. In the US, an entrepreneur is tradi-

tionally considered to be very successful if his company is listed on a stock exchange.

The owner of an attractive startup has a choice: he can either sell the business to a giant like Apple, Google or GE and then spend the rest of his life on a tropical island, or, in the case of so-called visionary types who do not want to retire at the age of 30, they can seek a stock exchange listing for their successful business. Thus, investors can benefit from the success of these companies, which would not be possible without listings.

“Polish entrepreneurs are becoming just like that, with a main life goal of being the proud owner of a public firm,” Herczku said. As a result, an upward spiral began in Poland, where the media hype over listed companies generated growing interest from private investors, which in turn attracted even more listings. Of course, the basic trigger was the regulation on pension funds and the requirement of investing in locally listed shares, which made the exchange a real alternative for fundraising and exits to involving private equity investors.

EBITDA for companies listed on the WSE. This has encouraged more Polish entrepreneurs to seek listings, which, in turn, gave a further boost to Poland’s capital markets.

The structure and timing of the privatization process did not help to strengthen the Hungarian capital market either, Szécsényi noted. Private investors acquired too much too fast. Thus, these companies rapidly disappeared from the stock exchange as the dominant, usually foreign, shareholders were trying to increase their stakes. If the government had sold these packages at a slower pace or retained a controlling stake, it could have kept these firms on the BSE longer.

Furthermore, equities lost ground in Hungary, as risk-averse investors preferred government securities to higher-risk assets such as equities, said Szécsényi. Another reason was the dominance of bank financing in both the retail and the corporate sectors.

As a result, market players are now reluctant to use alternative financing channels, partly because they are not accustomed to ensuring transparent operations.

LACK OF POLITICAL SUPPORT

INVESTING IN POLAND

But what are the factors responsible for the relatively weak position of the Budapest Stock Exchange? The management of the WSE has been more efficient than that of the BSE, said Bálint Szécsényi, CEO of Equilor Investment Zrt and the Budapest bourse’s new vice chairman. He noted that there are no miracles in Poland either; like the BSE, there are only a handful of highly liquid firms in Warsaw.

A major difference between the two markets is in the extent of political support.

While the Hungarian government preferred state property to be privatized through the stock exchange after the transition, it failed to provide the extent of political support that the Polish government did. In Poland, pension funds were required to invest their funds in Polish equities. Given their limited supply, share prices rose considerably. Enterprise value has often exceeded 20 to 25 times

KBC Securities Group is already a member of both the Warsaw and Prague exchanges, as it believes the future lies in ensuring easy access to the widest possible range of products for potential Hungarian investors. However, according to both companies’ experiences, the home market will always be investors’ preferred choice due to the language, the culture, the geographic proximity, and the familiarity of the brands and companies even before listing.

While Hungarian investors are showing interest in Polish equities, they need to be educated about how to trade on a remote market, which takes time. Both brokers encourage investors who want to invest in, say, the banking sector, to diversify their portfolios, for example by buying the shares of Poland’s Pekao and Czech Komercni Banka besides OTP Bank. With such diversification, currency and country risks can be managed to a certain degree. ■

WWW.BBJ.HU

FOCUS 15

Budapest Business Journal | Dec 2 – Dec 15

Funds with resilience BBJ

INVESTMENT COMPANIES Ranked by total net revenue

Rank

The BBJ’s Book of Lists contains 100+ sector-specific listings of leading companies. The Book of Lists comes free with a BBJ subscription, or can be ordered separately by e-mailing circulation@bbj.hu

1

INVESTMENT FUNDS

-9% CHANGE FROM JANUARY UNTIL OCTOBER IN TOTAL NET ASSETS MANAGED BY BAMOSZ MEMBERS

After the total assets managed by Hungarian investment funds fell gradually to HUF 3,478 billion in September, down from a peak of HUF 3,883 billion in February, total managed assets grew slightly again in October, up 1.6% to HUF 3,535 billion, the latest monthly report of the Association of Hungarian Investment Fund and Asset Management Companies (BAMOSz) shows.

Although exchange rate movements had a negative impact on the investment fund market in October, the improving sentiment on global bourses seen during that period outbalanced these effects.

The best-performing segment of the market was the equity funds market, as the Budapest Stock Exchange’s benchmark index rose 11.57% in October, which resulted in a 12.3% increase in the value of equity fund holdings, BAMOSz said.

Investors withdrew significant amounts from money market funds in October, but positive yields somewhat offset this, therefore there were hardly any changes were seen in this area, BAMOSz data indicates.

The total value of bond funds fell 1.8% on a monthly basis in October, and assets in capital-guaranteed funds saw a 0.5% decrease in October. As for real estate funds, the moderate capital withdrawal trend that has been seen since this summer continued, with some HUF 1.9 billion withdrawn in October, resulting in a 0.4% drop in real estate fund assets.

In the meantime, assets in mixed funds grew 4.3% in October, and HUF 2.5 billion in fresh capital flowed into these funds.

Commodity funds performed rather well in October, registering 7.3% month-on-month growth, and they attracted HUF 120 million in fresh capital.

Although the October performance of investment funds finally showed some improvement after a hectic year, greatly influenced by the government’s decision to rechannel private pension funds money to the state, the market might face further difficulties due to the early repayment option for those indebted in foreign currency mortgages.

Together with the worsening economic environment – both in Hungary and globally – further growth in investment fund assets is expected to be slow.

However, according to BAMOSz’s secretary general András Temmel, investors have become more relaxed and level-headed since 2008, when the crisis first hit Hungary, and therefore no dramatic movements are expected on the investment funds market in the near future. PF

2

Total net revenue (HUF mln) 2010

Company Website

Concorde Securities Limited Zrt www.concordert.hu

QUAESTOR Értékpapírkereskedelmi és Befektetési Nyrt

No. of Consolidated full-time profit in 2010 employees in (HUF mln)[1] 2010

4

5

6

7

BUDA-CASH Brókerház Zrt www.budacash.hu

Erste Investment Zrt www.erstebroker.hu

EQUILOR Investment Company Zrt www.equilor.hu

KBC EQUITAS Broker Zrt[2] online.kbcequitas.hu

HUNGÁRIA Securities and Investment Zrt

9

SPB Investment Zrt www.spbinvest.hu

Solar Capital Markets Securities Trading Zrt

10

11

12

13

14

Random Capital Broker Zrt www.randomcapital.hu

iFOREX Brokerage Zrt www.iforex.hu

HUNGAROGRAIN Zrt

3,805

100

26

QUAESTOR Financial Consulting Private Company Limited by Shares (42.10), QUAESTOR Tourist and Trading Company (28.40) –

– – –

1132 Budapest, Váci út 30.

(1) 299-9999 (1) 299-9990 laszlo.illes@quaestor.hu

3,610

343

236

Buda-Cash Vagyonkezelő Zrt (50 fölött) –

János Gyarmati, Péter Tölgyesi – –

1118 Budapest, Ménesi út 22.

(1) 235-1500 (1) 235-1599 info@budacash.hu

3,084

4234

130

Erste Bank Hungary Ltd (99) Erste Real Estate Ltd (1) –

Róbert Cselovszki – –

1138 Budapest, Népfürdő utca 24–26.

(1) 235-5100 (1) 235-5190 erstebroker@erstebroker.hu

67

– –

András Gereben, Bálint Szécsényi – –

1037 Budapest, Montevideo utca 2/C (1) 430-3980 (1) 430-3981 equilor@equilor.hu

Eddy D’Hertoge – –

1051 Budapest, Széchenyi István tér 7–8.

(1) 889-2650 (1) 889-2655 info@kbcequitas.hu

1,589

131

1,164

613

38

– KBC Securities N.V. (100)

467

47

51

István Seres (50), Lászlóné Kecskés (50) –

István Seres, Lászlóné Kecskés – –

2700 Cegléd, Rákóczi út 30.

(53) 311-664, (1) 311-665 (53) 316-400 info@hbe.hu

392

5

29

SPB Management Consulting Kft (100) –

Tamás Parádi Mónika Varga –

1051 Budapest, Vörösmarty tér 7-8.

(1) 483-2610 (1) 483-2615 julianna.szeplaki@spbinvest.hu

337

10

23

Zsolt Gábor Szabó (100) –

Örkény Szűcs Gyula Siklér Tamás Heitner

1062 Budapest, Váci út 1-3/C (1) 880-8777 (1) 880-8787 solar@solarcapital.hu

41

CODEX Security Printing House Ltd (55.75) –

Péter Galambos – –

1117 Budapest, Infopark sétány 3/B (1) 815-6500 (1) 320-0340 info@ertektar.hu

Nándor Tóth Ildikó Szántóné Vukics –

1052 Budapest, Vármegye utca 3-5.

(1) 501-3300 (1) 700-2900 info@randomcapital.hu

Reálszisztéma Securities and Investment Zrt

-8

246

-42

14

Ildikó Szántóné Vukics (40.400), István Hanyecz (31.100), Péter Csaba Móri (19), Nándor Tóth (9.50) –

215

-10

38

– iFOREX Holdings Ltd » ( )

– – –

1054 Budapest, Szabadság tér 14.

(1) 880-8400 (1) 880-8440 info@iforex.com

7

Szergej Keresztesi (67.62), László Szászkő (9.52) –

Szergej Keresztesi – –

1025 Budapest, Nagybányai út 76/A (1) 412-0145, 412-0146 (1) 412-0149 hungarograin.rt@ hungarograin.t-online.hu

24

Reálszisztéma Trade and Equity Management Kft (99), Piroska Marsi Kruchió (1) –

Piroska Marsi Kruchió – –

1053 Budapest, Kossuth Lajos utca 4.

(1) 266-9095 (1) 483-0243 ertekpapir@realszisztema.hu

12

5

Condora Financial Consulting Kft (100) –

Péter Heim – –

1013 Budapest, Pauler utca 6.

(1) 789-0085 (1) 789-0080 gabri.zsuzsa@ atticusinvestments.hu

40

9

Helikon Travel Agency Kft (79), Péter Koltai (21) –

Tibor Horváth – –

8360 Keszthely, Erzsébet királyné útja 21.

(83) 314-300 (83) 510-580 –

József Prantner – –

1036 Budapest, Lajos utca 118–120.

(1) 387-5741 (1) 387-5744 info@strategon.hu

152

www.hungarograin.hu

148

20

0

www.realszisztema.hu

15

16

17

18

ATTICUS INVESTMENTS Zrt

132

www.atticusinvestments.hu

PLÁNINVEST Bróker Zrt

118

www.planinvest-broker.hu

STRATEGON Securities Zrt www.strategon.hu

AEGON Hungary Tracker Certificate Seller Zrt

117

23

16

József Prantner (48.80), Stratego Communikation Kft (26), Róbert Farkas (25.20) –

96

33

6

AEGON Hungary Investment Fund Management Closed Company Limited by Shares (100) –

Andrea Palyik – –

1085 Budapest, Kálvin tér 12–13.

(1) 476-2043 (1) 476-2030 –

4

Tamás Makara » ( ), Ferenc Faragó » ( ) –

– – –

2000 Szentendre, Mandula utca 8.

– – –

www.aegonforgalmazo.hu

19

VM and VM Zrt vmesvm.wordpress.com

1123 Budapest, Alkotás utca 50.

(1) 489-2200, (30) 344-2700 (1) 489-2201 a.szabadi@con.hu

105

267

www.ertektar.hu

Árpád Pál – –

1351

www.solarcapital.hu

CODEX Stockbroker Zrt

Address Phone Fax Email

4,553

www.hungariaertekpapir.hu

8

Top local executive Finance director Marketing director

TC Investment Ltd (30) –

www.quaestor.hu

3

Ownership (%) Hungarian Non-Hungarian

76

54

NOTES: (1) From the database of Hungarian Financial Supervisory Authority. (2) Merged with KBC Securities.

»= would not disclose, NR = not ranked, NA = not applicable

This list was compiled from responses to questionnaires received by Nov 30, 2011 and publicly available data. To the best of the Budapest Business Journal’s knowledge, the information is accurate as of press time. While every effort is made to ensure accuracy and thoroughness, omissions and typographical errors may occur. Additions or corrections to the list should be sent on letterhead to the research department, Budapest Business Journal, 1075 Budapest, Madách Imre út 13–14., or faxed to (1) 398-0345. The research department can be contacted at research@bbj.hu

LIFE

PEOPLE Better know a CEO with Tammy Nagy-Stellini, Hays

▶ PAGE 20

EVOLVING HUNGARIAN CONTEMPORARY CUISINE IN THE PAST FEW YEARS, GASTRONOMY HAS AT LAST COME INTO VOGUE IN HUNGARY. DOMESTIC RESTAURANTS ARE NOW ALIVE AND THERE ARE SOME INFLUENTIAL LOCAL WORKSHOPS AROUND WHERE THE LEVEL OF HOSPITALITY IS TRULY WORLD-CLASS. IN 2011, THE MAIN CHARACTERISTICS OF THE RENEWAL OF THE HUNGARIAN GASTRONOMY HAVE BEEN THE REDISCOVERY OF ROOTS AND COMMITMENT TO QUALITY INGREDIENTS. Fillet of veal in a crust of herbs with roasted celery seasoned with balsamic vinegar (Mák Bistro)

It is becoming obvious that cooking is as much a science as an art, and is a serious undertaking that requires concentration and plenty of work. Print magazines and online portals are loaded with articles on fine dining, culinary trends and celebrity chefs, and there is a flood of reviews. Dining out, attending gastro fests, cooking with friends, discussing ingredients, slow food and Michelin stars are all in vogue.

Getting here hasn’t been easy, but today there is a serious league of professionals aware of seasons, ingredients, and high-end technologies. They know what fits Hungarian cuisine in particular and are also guestfocused. The most telling sign that the country is going in the right direction is the second Michelin star awarded to a Budapest eatery in 2011. Culinary bliss needs no stars, of course; exciting things are on the go in many places around the country.

BACK TO BASICS The most common stereotype about Hungarian cuisine (supported by unfortunate domestic practice) is that the majority of our dishes are made with paprika. Paprika only became dominant in the 19th century; before that, meals of much higher variety were cooked in both aristocratic and bourgeois households. Cooks picked from an incredibly wide range of ingredients, and made a wide variety of soups, sauces, fishplates and game dishes. In the second half of the 19th century, technological methods from French cuisine were integrated in Hungarian gastronomy practices.

The best domestic workshops are now trying to find a way back to these basics. In addition to the latest technologies, they also apply traditional cooking methods. Instead of using flour-based thickening, they stiffen sauces either by using their own material or boiling with butter. They also apply bainmarie, bake in salt, prepare confit and use fresh herbs to flavor food.

“I am trying to get back to basics; authenticity is an important value for me,” says Csaba Ádám, the young chef of Kereskedőház Restaurant in Szentendre. “In my interpretation, Hungarian cuisine equals the cuisine of the whole Carpathian Basin and the incredible variety of ingredients which used to be natural in Hungary before the Treaty of Trianon – sea fish from Fiume (Rijeka), game from the woods, crayfish from mountain springs and so on. The shrinking of the geographical borders also resulted in the shrinking of the scope of Hungarian cuisine to the gastronomy of the Great Hungarian Plain,

characterized by the use of paprika. My goal is to draw inspiration from the greater, richer gastronomy of the Carpathian Basin.

Of course, all of this can be spiced up a little: dishes can be streamlined and the simple ones can be updated a bit by choosing different ingredients or preparing and serving them differently.

Around the Buda Castle an interesting “gastro-axis”, consisting of three restaurants, has been created presenting some of the possibilities of the revival of traditional Hungarian cuisine. “Pierrot represents the eclectic cuisine of the AustroHungarian Empire. 21 offers an advanced, more creative variant of the Hungarian pre-war bourgeois gastronomy. And finally, Pest-Buda provides simple dishes that give one the sense of eating grandma’s food,” explains Zoltán Roy Zsidai, owner of the restaurants in Fortuna Street. “The trick is to offer them at the best quality available. We go back to the basics and try to recreate these dishes. We don’t rush it or spare on it – as it was in the days when cuisine wasn’t about economizing.”

THE KEYWORDS: SEASON&INGREDIENTS In today’s global culinary trends, locality and simplicity are decisive features. Dishes prepared with these in mind are made from fresh, local ingredients produced in a natural and traditional way. According to socalled locavorism, a movement supporting local food, people should eat seasonal food produced or processed within their immediate area instead of being imported from thousands of miles away.

Fortunately, the highbrow Hungarian gastronomy of the past few years has accepted and applied this approach. Cooks use fresh, seasonal ingredients that result in a more diverse, exciting and unique food palette.

“The content of the menu or the daily specialties also depend on what we like to eat in the particular season,” says Balázs Csapody, owner of the Kistücsök Restaurant in Balatonszemes. “We seek seasonality and regionalism, as a result we can always come up with dishes that are fresh. An example: if we get some quality porcini after a summer rain, we offer porcini carpaccio. We prepare this food for 15-20 people and when it’s sold out, the name of the dish is removed from the blackboard. On the following day, a new entry is added to the menu. This gives us the freedom to create the most up-to-date seasonal dishes.”

Although the quality of Hungarian ingredients has improved highly recently,

representatives of haute cuisine are still not satisfied. Some say vegetables, fruits, poultry, dairy products and fish of reliable quality can already be obtained from domestic farmers but meat is still imported from abroad by many. In parallel with the revival of domestic culinary life, many farmers have began to work more seriously at achieving better quality, trying to become permanent suppliers of some of the best restaurants, but there is still room for improvement. Continuous communication between restaurants and farmers is a must, as products should be adjusted to meet the needs of gastronomy.

LIFE 17

OPINION The Budapest Stock Exchange is desperately trying to revitalize Hungary’s capital p market,, but we suspect p that it might g be too little,, too late. ▶ EDITORIAL, PAGE 23

Poppy seed bread pudding (Mák Bistro)

Hungarian nouvelle cuisine: reinventing the pancake If you want to understand what is happening to Hungarian cuisine, you need to go no further than Zsófia Mautner, a food blogger who has become famous for her blog Chili & Vanília. She has been one of the stars of the new Hungarian interest in all things food and wine and has become a benchmark for foodies and restaurateurs.

A eurocrat who enjoyed the culinary pizzazz of Brussels, Zsófi started her blog by explaining how to use ingredients and spices never before heard of in Hungary.

In her new cookbook titled Gyere velem főzni (Come cook with me) she

still uses pomegranates and corianderleaves, but her attention is increasingly turning towards how to reinvent traditional Hungarian foods such as slambuc (a dish of pasta, potatoes, kolbász and lard) and kohlrabi soup (with ginger and coconut milk.)

In her recipe below, she does a lighter retake of the Hungarian dessert every mother knows how to make: pancake torte, where pancakes are traditionally layered with apricot jam, ground walnuts and ground poppyseeds then cut like a cake. In its traditional version, it is a firm favorite for parties, but too rich for many.

PANCAKE TORTE WITH VANILLA SUGAR AND NUTS yields 8 slices INGREDIENTS:

3 large eggs, separated 60 g + 20 g sugar a pinch of salt 300 ml whole milk 200 g all-purpose flour zest of ½ orange zest of ½ lemon, grated 100 g caster sugar 1scraped vanilla pod 150g nuts, chops 1TS butter to grease the tin optional: 1 TS Cointreau or orange water

Roast lamb and lamb’s tongue with dumplings stuffed with eggplants cream (Alabárdos restaurant)

This is the key factor in reaching high and reliable quality.

Besides the return to basics and the growing appreciation of seasonality in haute cuisine, a new approach has also spread: simplicity. This is the virtual signpost to Alabárdos Restaurant, situated in the Buda Castle. The restaurant is a strong representative of sophisticated Hungarian cuisine based on traditional style. “Ever since we decided to represent Hungarian gastronomy exclusively, the style of cooking has become more pure,” says kitchen manager Attila Bicsár.

“The more we see, the more the dishes and tastes get simple. We focus more on the main

elements and those additions which makes dishes exciting.”

Balázs Pethő, the chef at Csalogány 26, is of the same opinion: “We prepare everything in a simple way. To be precise, the food looks simple on the plate but it takes loads of work: developing all the small details, storing the ingredients carefully and protecting them from harm in order to be able to produce the same quality food in any moment. Furthermore, we don’t follow an l’art pour l’art complication of things. Running a restaurant is not about exhibitionism: it’s about feeding people.”

Although critics will find fault every now and then, there are many signs showing the resurrection of Hungarian gastronomy. If foie gras is served the same way in a mid-priced restaurant offering traditional Hungarian dishes as in a three Michelin star restaurant in the Netherlands (as does happen), we probably are on the right track.

From small rural inns to fine dining restaurants, more and more people are committed to quality and they stand by that. That’s the real trick.

Krisztina Szerdahelyi is the editor of the BBJ’s restaurant guide Fine Restaurants, out soon. If you would like to place a pre-order, contact circulation@bbj.hu

1. In a mixing bowl, combine egg yolks with 60 g sugar and a pinch of salt and beat until white.

2. Add the milk and flour. Stir in orange and lemon zest, and orange liqueur or orange water.

3. Whisk the egg whites, adding the remaining sugar when it starts to harden. Combine it with the egg-flour mixture.

4. Put the caster sugar vanilla mixture in a bowl, and chopped, roasted nuts in another.

(If you have unroasted nuts, roast them in an empty pan.)

5. Preheat the oven to 160 Celsius. Grease an 18-cm heatproof dish or cake tin (approx. the size of the skillet.)

6. Heat one teaspoon of butter in a skillet.

Use a small ladle to add enough batter to coat the bottom of pan in a thin, even layer, rotating pan as needed to cover (this batter is thicker than normal). Cook until the edges set up and the top is just slightly moist. Cooking only one side of the crepe, make eight of them. It’s ready when the top is set but the batter is creamy.

7. Place the pancakes in the dish or tin with their uncooked side upper most and top with one tablespoon of sugar and/or nuts. Continue in this manner until all the pancakes and filling are used. Cover the torte with the last pancake cooked side up. Gently push it with a spatula to make the layers set.

8. Cover with aluminum foil and place in the oven. Cook for 15 minutes.

9. Remove from the dish and sprinkle with caster sugar. Serve when cooled.

Translated from Gyere velem főzni

WWW.BBJ.HU

18 PEOPLE

Budapest Business Journal | Dec 2 – Dec 15

[ PROMOTIONAL FEATURE ]

Lotus Therme Hotel & Spa

★★★★★

Pamper your body and soul in the one and only 5-star hotel in Héviz. Within a few minutes walk is the largest thermal lake in Europe while the hotel itself is situated in a unique 17 acre green park. Rebalance yourself following a pampering massage in our spa or refresh and relax in our wellness pools and recreation rooms. Unique features with outstanding services.

Regain your balance: pamper you body with our special massages, plunge into our pools, discover the special experience of the sauna world with our ritual sauna potting, or relax in our Dead Sea salt cave, unique in Hévíz.

Recover from your illness or relax with the help of our traditional treatments: Thai massage, shiatsu, yumeiho, Lomi Lomi or the special Ayurveda massages are beneficial for the soul as well. In our beauty parlor, L’Oreal hairdressers and a variety of facial and body

treatments with the products of Germaine de Capuccini are waiting for ladies and gentlemen who wish to relax or grow in beauty.

LOTUS THERME Hotel & Spa HÉVIZ★★★★★ H-8380 Hévíz, Lótuszvirág u. 1. Pf. 80 Tel.: +36 83 500 512 • Fax: +36 83 500 513 E-mail: Alexandra.Miseta@lotustherme.net www.lotustherme.net

WWW.BBJ.HU

LIFE 19

Budapest Business Journal | Dec 2 – Dec 15

Countryside hotels have high hopes for SzÉP BBJ

FOUR/FIVE STAR HOTELS OUTSIDE BUDAPEST[1] Ranked by total net revenue

Rank

The BBJ’s Book of Lists contains 100+ sector-specific listings of leading companies. The Book of Lists comes free with a BBJ subscription, or can be ordered separately by e-mailing circulation@bbj.hu

Company Website

Total net revenue (HUF mln) 2010 H1, 2011

Occupancy rate in 2010 (%)

FOUR/FIVE STAR HOTELS OUTSIDE BUDAPEST

+10.8% CHANGE IN TOTAL NET REVENUE OF LISTED HOTELS

Countryside hotels in Hungary were only moderately helped by the country’s EU presidency. Developments are stalling and only the newly introduced holiday voucher may bring hoteliers some relief.

Guest nights during the first nine months increased by approximately 3-4% compared to the same period of last year. However, the crisis is definitely far from over, as overall revenues are at the same level as in 2007. The occupancy rate nationwide was around 43% on average, the lowest in the region. The proportion of foreign guests has increased in comparison to domestic tourists, but the overall 6.5% increase in foreign tourism was mainly the result of official and related visits by EU officials and their personnel.

Beyond Budapest, developments have been confined to four-star hotels in the countryside, mainly spas. Though it did not stop entirely, construction activity remains low: only a handful of new hotels have been completed, the development of which were already started.

The growth generated by the country’s turn at the EU presidency gradually faded in the second half and did not recover from the summer peak season either. The number of tourist nights spent by foreign and domestic tourists at Lake Balaton decreased by 2.3% on the year.

Hoteliers have welcomed the introduction of the Széchenyi Recreation Card (SzÉP), a voucher that can be topped up and used at hotels, restaurants and theaters. The turnover in holiday vouchers will depend on how widespread the use of the newly introduced cards will be. Experts believe it will be more likely to have a beneficial effect on turnover in 2012.

To spur demand, state tourism agency Magyar Turizmus Zrt could step up its campaign activity, but the fate of the HUF 2 billion budget it is supposed to receive from the state for next year also looks grim. For countryside hotels, one way out of the sluggish business could be online booking. According to a survey by consulting firm BDO Hungary, one-third of guest nights are booked via the internet, and online booking has grown 20% annually in the past three years. If this growth rate keeps up, it may help hotels to weather the double dip. ZsV

MOVING ON Spririt Hotel Thermal Spa Kehida Thermál Hotel Aquaticum Debrecen Mesés Shiraz Wellness

1

2

3

4

LARGEST CHANGES IN THE LIST

2,516

www.spirithotel.hu

»

NaturMed Hotel Carbona

1,988

» »

273 17 6

www.carbona.hu

»

69

522 251 5 7

Aquaticum Debrecen Mediterranean Aquapark

1,770

»

317 94 2 4

»

234

www.aquaticum.hu

»

Hotel Európa Fit

1,678

http://www.europafit.hu

»

» »

Single rate (€/night) Double rate (€/night)

No. off full-time employees on Sep 1, 2011

Ownership (%) Hungarian NonHungarian

Top local executive Finance director Marketing director

Address Phone Fax Email

86 166

»

(100) –

Alfred Hackl Andrea Spilenberg Szilvia Móricz

9600 Sárvár, Vadkert körút 5.

(95) 889-500 (95) 889-515 info@spirithotel.hu

Ferenc Lukács Katalin Keszi Judit Lamperth

8380 Hévíz, Attila utca 1.

(83) 501-500 (83) 340-468 hotel@carbona.hu

85 117

229

Buda Invest Kft. (84.41) other (15.59) –

92 121

»

Debrecen Property Management Zrt. (100) –

Lajos Fazekas Zsuzsanna Hámos Zsuzsanna Kovács

4032 Debrecen, Nagyerdei park 1.

(52) 514-111 (52) 311-730 hotel@aquaticum.hu

»

HSG Invest Kft (100) –

László Könnyid Csilla Wimmer –

1116 Budapest, Mesterházi utca 10.

(83) 501-169 (83) 501-101 sales@europafit.hu

132

DBI Real Estate Utilization Kft (100) –

Gábor Nádas Mária Engi László Durkó

2025 Visegrád, Lepence-völgy (26) 801-900 (26) 801-918 info@thv.hu

»

– –

Péter Bársony – –

2481 Velence, Tó utca 4-6.

(22) 589-900 (22) 589-971 reservation@ velencespa.com

63 112

136

Hungarian Kolping Family Holiday Foundation (50) Kolping Bildungswerk Augsburg Kft. (50) –

Csaba Baldauf Katalin Hosszú Markó Zsuzsanna Pál

8394 Alsópáhok, Fő utca 120.

(83) 344-143 (83) 344-142 sales@kolping.hotel.hu

143 171

101

Szalók Holding Zrt (100) –

Zoltán Kiss Edit Illés –

3394 Egerszalók, Forrás utca 6.

(36) 688-600 (36) 688-689 sales@salirisresort.hu

64 96

0

5

6

7

Thermal Hotel Visegrád www.thv.hu

1,406 644

Velence Resort & Spa

1,396

www.velencespa.com

Kolping Hotel Spa & Family Resort www.kolping.hotel.hu

8

9

11

Saliris Resort Spa & Conference Hotel

12

13

14

15

18

1,308

»

1,040

»

Kehida Termál Hotel

853

www.kehidatermal.hu

»

Holiday Inn Budapest– Budaörs

660

Abacus Business & Wellness Hotel

»

641

www.abacushotel.hu

»

Hotel Silvanus

545

www.hotelsilvanus.hu

Hotel Silver Resort

»

435

www.silverresort.hu

»

Aranyhomok Business Wellness Hotel

369

www.hotelaranyhomok.hu

16

»

www.salirisresort.hu

www.hibudhotel.hu

17

+14 +10 +9 +4

Spirit Hotel Thermal Spa

No. of beds No. of rooms No. of suites No. of meeting rooms

Mesés Shiraz Wellness & Training Hotel

»

192

www.shiraz.hu

»

Hertelendy castle

156

www.hotel-hertelendy.hu

»

Hotel Karos Spa

126

www.karos-spa.com

»

56

398 164 10 10

» »

76

179 4 7

450 140 4 3

» »

193 10 11

109 149

71 89

»

138 42 3 1

62 90

»

Tihamér Horváth (50) Sebestyén Horváth (50) –

Tihamér Horváth – –

8784 Kehidakustány, Kossuth Lajos utca 62.

(83) 534-503 (83) 534-592 sales@kehidatermal.hu

»

320 160 3 6

» »

»

Alliance Hotel Bp. Kft. (100) –

Tamás Kelemen – Mónika Bencze

2040 Budaörs, Agip utca 2.

(23) 504-000 (23) 504-090 reservation@holiday-inn.hu

»

280 117 11 2

75 93

»

– –

Zsolt Kálmán – Andrea Lipták

2053 Herceghalom, Gesztenyés út 3.

(23) 532-360 (23) 532-361 hotel@abacus.hu

»

331 151 20 7

80 110

74

Árpád Lantos (76) Andrea Lantos-Makádi (12)Ildikó Lantos (12) –

Árpád Lantos Imre Kucsera Andrea Lantos-Makádi

2025 Visegrád, Fekete-hegy (26) 398-311 (26) 597-516 @ info hotelsilvanus.hu

»

160 58 9 5

55 75

»

Silver Bridge 2002 Kft. (100) –

Andrea Rádóczy Edit Molnár Rita Kántás

8230 Balatonfüred, Zákonyi Ferenc utca 4.

(87) 583-000 (87) 583-002 sales.balaton@ silverresort.hu

»

210 108 4 6

78 99

39

Aranyhomok Hotel Kft. (100) –

Dóra Gömöri – –

6000 Kecskemét, Kossuth tér 3.

(76) 503-730 (76) 503-731 sales@hotelaranyhomok.hu

»

134 42 3 5

88 106

»

(100) –

Richárd Szepesi – –

3394 Egerszalók, Széchenyi út 31.

(36) 574-500 (36) 574-505 info@shiraz.hu

»

40 6 8 1

270 173

43

Róbert Sándor Korach (0.10) Remi Finanz- und Verwaltungs Aktiengesellschaft (99.90)

Kurt Ropers István Gyenesei Róbert Somogyi

7541 Kutas-Kozmapuszta, 0120/4 hrsz.

(82) 568-400 (82) 568-030 hotel@hotel-hertelendy.hu

141

(100) –

Botond Üsztöke – Nikoletta Gyutai-Szalay

8749 Zalakaros, Alma utca 1.

(93) 542-500 (93) 542-501 sales@karos-spa.hu

» 41

221

» 2

105 165

NOTES: [1] Some large hotel chains (Danubius, Hunguest for example) are exluded from the ranking because they were unable to give a revenue breakdown by hotel and are thus not comparable.

PEOPLE WHO'S NEWS

Name Jeff McAllister Current company/position Cellum Global Zrt/vice president in charge of international trade Previous company/position -/-

McAllister joined the mobile payment solution developer in November, after having been on a two-year sabbatical. He first arrived in Hungary in the mid-90s, when he worked as the head of the GTE Yellow Pages publishing house. Later he worked as chairman-CEO of New World Publishing, the then publisher of Budapest, Prague and Warsaw Business Journals. He then returned to the US where he managed his own business. In 2005, he returned to Budapest to join Alcatel-Lucent.

Do you know someone on the move?

Send information to research@bbj.hu

Name Krisztina Szabó Palástiné Current company/position ING Befektetési Alapkezelő Zrt/CEO Previous company/position ING Befektetési Alapkezelő Zft/director of finance and operations

Pájer, whose post as investment director at ING Befektetési Alapkezelő has been taken over

by Nagy, continues his career as regional investment director at ING Investment Management, and will be in charge of investment policies in the CEE region.

Name Jenő Nagy Current company/position ING Befektetési Alapkezelő Zrt/investment director Previous company/position ING Befektetési Alapkezelő Zrt/stock portfolio manager

Pápay has been named to lead the banking industry services division of Accenture, the management consulting, technology services and outsourcing company. Before joining Accenture, he led the finance team of SAP Hungary. He has also worked in the US, at internet service provider company Comcast Cable.

Name Miklós Pápay Current company/position Accenture/director for banking industry services Previous company/position SAP Hungary/head of finance

Name Tamás Pájer Current company/position ING Investment Management/regional investment director Previous company/position ING Befektetési Alapkezelő Zrt/investment director

[ BETTER KNOW A CEO ]

In addition to her new role, Palástiné will keep her existing duties at the company. She joined ING eight years ago, before which she worked with accounting firm Coopers & Lybrand.

She obtained her diploma from the College of Finance and Accounting, and is also a chartered accountant.

Apart from her native Hungarian, she speaks fluent English.

▶ What kind of job did

Bakács will be in charge of sales at Accenture’s energy and utilities industry services. He has more than 20 years’ experience in the field of energy. Among others, he has worked in the top management of companies such as E.ON Hungária Zrt and MVM. Name István Bakács Current company/position Accenture/director for energy and utility industry services Previous company/position -/-

▶ Who is your favorite

MANAGING DIRECTOR, HAYS HUNGARY

Nagy-Stellini started her career in Hays in 2002, initially based in the Czech Republic and concentrating on building up the accountancy and finance recruitment team. Once the team in Prague had grown to a certain level, she took on the task of opening up Hays in Hungary, along with being the business development manager for the CEE region, which included Poland, the Czech Republic, Slovakia and Hungary. The next major step in her career with Hays was taking over the operational responsibilities for establishing Hays in Russia. Nagy-Stellini is currently based in Hungary and is responsible for the executive management of the expanding branch, which is now successfully supporting major clients.

▶ What is yourr favorite fa

fictional hero? tional he ero?

gadget?

Road Runner.

I would say my most used gadget, which is my Blackberry.

hart in Reykjavik, Iceland.

old laugh with my husband and friends.

What is the trait you most disapprove of in others?

Dishonesty, giving up and laziness.

Which living person do you most admire?

My cousin, who overcame cancer and has now dedicated her life and energy to fund raising activities.

If you were to die and come back as a person or a thing, what would it be?

I would come back as myself and relive my life: I have enjoyed it so far!

What is your greatest fear?

That I won’t manage to learn Hungarian fluently.

Which living person do you most despise?

I don’t really despise anyone in particular.

Which word do you tend to overuse?

Fantastic!

What makes you sad?

Losing someone close to you.

What is your most treasured possession?

Definitely my health.

When and where were you happiest?

In Budapest five months ago when I gave birth to my daughter Sophie.

What three things would you take with you to a deserted island?

A book, sunglasses and a towel!

How does your dream dinner party look?

It would be with family and friends, fresh seafood, good wine (definitely Hungarian wine would be included), and would take place outside at sunset on a warm summer evening with a view overlooking the sea.

What was the most extravagant thing you’ve done in your life?

Dinned next to Harrison Ford and Calista Flock-

What are the activities that help you to cope with stress?

Food, so eating would be the activity and a good

What is your dream to live to see?

Getting old with my husband and to see our daughter growing.

you dream of when you were a child?

To become a pilot, so I could travel the world.

TAMMY NAGY-STELLINI

Nagy started his career at ING’s legal predecessor NationaleNederlanden, in 1996 as a marketing analyst, and then became an investment analyst.

He had worked as stock portfolio manager at ING Befektetési Alapkezelő since 1997. Nagy holds a degree in chemistry from the Eötvös Loránd University, and completed his PhD at Queen’s University, Canada.

Which talent would you most like to have?

I would love to be able to sing.

PF

WWW.BBJ.HU

LIFE 21

Budapest Business Journal | Dec 2 – Dec 15

CHRISTMAS MARKET OPENED IN DOWNTOWN BUDAPEST

UPCOMING

events

The spirit of Christmas has arrived at Vörösmarty tér: the 13th Budapest Christmas Fair opened at the end of November, with some 130 vendors in 66 booths waiting for visitors.

This year’s market has seen several novelties. Young craftsmen who won a tender issued by organizer BTDM Nonprofit Kft have a chance to introduce their artworks in a separate booth; the entire area of the fair has free WiFi access; and Budapest card holders receive a 10% discount on all goods offered in the market. The event also welcomes a special guest: Belgium is only the first in the row of countries who will be invited in the coming years, the organizer said.

The fair attracts some 600,000 visitors each year, nearly half of them foreigners, and in spite of the worsening economic environment, BTDM expects the same number of people to attend this year.

DEC. 3 Canadian Lobster Dinner LOCATION Hotel Intercontinental Budapest, Dist. 5, Apáczai Csere János u. 12-14 TIME 6 p.m.

FEE HUF 28,000 (including VAT) ORGANIZER Canadian Chamber of Commerce in Hungary CONTACT Gusztáv Rapp; lobster@ccch.hu

ROMA MEETS BUSINESS

DEC. 6

At a round-table discussion, organized jointly by DUIHK and the Hungarian Business Leaders Forum, Roma leaders met economic representatives to discuss job creation, mutual expectations, and equal opportunities.

DUIHK Charity Santa Claus party and fair LOCATION Német-Magyar Gazdaság Háza, Bp., Dist. 2, Lövőház u. 30 TIME 3 p.m. – 9 p.m.

ORGANIZER German-Hungarian Chamber of Industry and Commerce CONTACT Marietta Németh, nemeth@ahkungarn.hu, 345-76226

November 15, DUIHK offices

DEC. 8 Swisscham Legal Forum LOCATION Adina Apartment Hotel, Bp., Dist. 13, Hegedűs Gyula u. 52-54 FEE Free for members, HUF 5,000 for non-members

BUSINESS LUNCH WITH THE IRISH-HUNGARIAN BUSINESS CIRCLE In the framework of the Business Lunch series of the NetherlandsHungarian Chamber of Commerce, the Irish-Hungarian Business Circle was the invited guest on the third Business Lunch event of the chamber in mid-November.

ORGANIZER Swisscham Hungary Swiss-Hungarian Chamber of Commerce CONTACT www.swisscham.hu DEC. 12 DUIHK 19th Prosperity Forum LOCATION Német-Magyar Gazdaság Háza, Bp., Dist. 2, Lövőház u. 30 TIME 6 p.m.

FEE Free for members; HUF 16,000 + VAT ORGANIZER German-Hungarian Chamber of Industry and Commerce

November 17, Hotel InterContinental

CONTACT Marietta Németh, nemeth@ahkungarn.hu, 345-76226 DEC. 15

GERMAN GOURMET DAYS At the opening dinner of the German Gourmet Days, a custommade menu welcomed quests in the Giardino restaurant. German Gourmet Days are held three times a year, with three different hotels hosting the event.

November 24, Kempinski Hotel Corvinus

BCCH Christmas Cocktail Party LOCATION Old Banking Hall of the British Embassy, Bp. Dist. 5, Harmincad utca 6 TIME 6 p.m.

ORGANIZER British Chamber of Commerce in Hungary, British Embassy, Hungarian Business Leaders Forum, Hungarian Association of British Alumni CONTACT www.bcch.com The Budapest Business Journal is happy to publish news on business, social or charity events in its calendar section. Please submit your request at least two weeks in advance of publication date to news@bbj.hu

For community events visit our partner:

OPINION [ ESSAY 01 ]

The climate change task that awaits in Durban C CHRIS HUHNE H U Minister for UK Energy and Climate E Changes C

O

ne year ago, amidst a swirl of pessimism, the UN negotiations on climate change kicked off in Cancun. Following the disappointment at Copenhagen, it seemed that the principles of international negotiation itself were on trial.

Expectations were low. But out of the acrimony arose a new consensus. For the first time, the world agreed to keep global warming to below two degrees.

This is significant. The world does not agree that often. We have but a few truly global agreements – and just one global organization. Next week, the United Nations will convene the next round of talks on a global climate treaty.

Unfortunately, for many countries times could not be harder. Europe faces a currency crisis of constitutional proportions. The United States is preoccupied with jobs and growth. The Middle East and North Africa are consumed by questions of political reform.

Last year, our focus was to keep the show on the road: as long as you are talking, there are options. But time is running out. As the

International Energy Agency noted earlier this month, the window for meaningful action on climate change is now measured in years, not decades. The science tells us we must bring down global emissions by 2020 or face terrible consequences.

In Cancun, we began to put in place a global architecture to monitor emissions and support developing countries in tackling climate change. But a more fundamental question went unanswered. Where are the international talks heading?

Are we moving towards a legal agreement committing major emitters to binding emissions targets, or countries voluntarily pledging to take action?

My answer is simple: a global deal covering all major economies is an absolute necessity.

This was important enough to both partners that it was in the Coalition Agreement. The UK remains a steadfast advocate of a legally binding agreement under the UN. No major global problem – whether the arms race or trade conflicts – has ever been resolved by relying on the power of political promises.

Given the current climate, this is not going to happen immediately. Durban will not be our eureka moment. But we can provide a clear signal that it is our objective.

There is already a legally binding deal in place: the Kyoto Protocol. In 1997, 37 major economies – including Japan, Russia, Canada, Australia and the EU – formally committed

to cutting emissions. The EU has already surpassed its Kyoto target.

The first Kyoto Protocol commitment period ends next year, and Japan, Russia and Canada have said they will not enter a second.

The EU, on the other hand, wants just that.

But if the EU alone signs up – without comparable commitments from major emitters including the US, or major emerging economies such as China, Brazil and India – then we won’t have achieved much. The EU, responsible for just 12% of the world’s emissions, would be left sitting alone in a global framework – without the rest of the globe.

That will not do.

We need major economies to commit now to a comprehensive legal framework, and to complete negotiations by 2015. That is not just what we want: it is what the vast majority of the developing world wants, especially vulnerable small islands and the poorest countries.

That is why, together with the rest of the EU, I have made it clear that I am keen to secure a second commitment period of Kyoto.

But others must commit to the global legal framework the world needs. Ultimately, Durban is about the movement others make.

Kyoto provides the basis of the rules we need to manage a destabilizing climate. If we have learned anything from the financial crisis, it is that clear rules implemented properly can prevent the toxic buildup of risk. That is why Durban must not be the end of Kyoto. Rather, it must signal our re-commitment to a cause.

Rules work. A recent survey of large global firms found that 83% of business leaders think a multilateral agreement is needed to tackle climate change, but only 18% thought a deal was likely. Businesses want certainty; people want action. Only the politics lags behind.

A clear commitment to commit to a new agreement will provide that certainty. But we need immediate action too. The pledges currently on the table are not enough. In Durban, we should agree that we must close the gap.

We can identify actions we can take now, and build momentum towards a major review of ambition. We can also build on the system we use to measure and verify emissions cuts.

We must do more on long-term financial support for developing countries, and establish the Green Fund. And we must continue the work already underway to reduce emissions from deforestation.

We must also show leadership. Next year I will be pressing for a more ambitious EU emissions target: a 30% reduction by 2020.

That will help us raise our sights globally.

This will not be an easy path. But I believe it is the only feasible way of achieving our objectives. Milton Friedman once said ‘our basic function is to keep good ideas alive until the politically impossible becomes the politically inevitable’. That is a good description of the task that awaits in Durban.

Chris Huhne is the UK’s Minister for Energy and Climate Change.

[ ESSAY 02 ]

How to keep your best people forever ÁRON LUKÁCS interim manager

hen managers are under great pressure, they are usually full of enthusiasm and want to prove themselves at first. The length of this stage, depending on a manager’s personality, can vary from months to years.

However, a manager will recognize his or her own limits after a while. Creativity and inner motivation decreases, and daily routine takes over – at the same time, efficiency declines. Recognizing this and the importance of added value in a profit-making process, half-year or full-year sabbaticals have become increasingly popular everywhere in the corporate world.

W

Depending on company policy, conditions for sabbatical leave are described in a separate document; however, there are no legal obligations set either for the employer or the employee. Based on mutual agreement, this can be required and started at any time.

Depending on job descriptions, paid or unpaid sabbatical leave is allowed after 5-7 working years. But after spending 2-3 months in a responsible position, a sabbatical of 2-3 months can also work wonders.

Some companies tie sabbatical leave to some form of self-improvement training, while others have no special expectations as to how a manager should spend his or her respite from work.

The popularity of sabbaticals lies in the fact that this form of rest, in addition to being a pleasurable way of spending some time off, breaks the routine and makes work look attractive again. It is also financially profitable in the medium- and long-term.

A further great benefit of a sabbatical is that it offers complete renewal without hav-

ing to fold up a fruitful cooperation, claims László Steiner, president of the Hungarian Interim Management Association.

The concept of a sabbatical is not widespread yet in Hungary, and is usually proposed by the employee. In the case of a wellknown multinational company in Hungary, for example, a member of the top management had put in a request for a 15-month sabbatical eight months in advance.

Although this was an unfamiliar practice at the firm, following some negotiations, the head of the company came to the conclusion that they might lose a colleague for 15 months, but as the person in question had a career of at least 25 years with the company, both sides decided to go with it.

According to another example, this one in the film and advertisement industry, the management accepted a proposal coming from a manager who had worked for ten years at the company previously.

Most companies hire an interim manager who is fully qualified to fill the position, to

temporarily replace the colleague on rest leave. An interim manager takes on the job for a definite period and with a detailed job description, and because he or she does not have ambitions for a full-time contract, the position of the colleague on sabbatical is not put in jeopardy. In many cases, the person on sabbatical is actively involved in the recruitment process.

This way, he or she can personally make sure of the interim’s competence and can start the sabbatical with an easy mind. As for interim managers, they find motivation in new challenges and the chance for continuous learning.

They build their career accordingly and are devoted to this lifestyle. And when their contract expires, they can proceed to their next assignment with renewed forces. But interim managers also say nothing works better than taking a well-deserved rest after a few intensive months of work. Áron Lukács operates in the field of innovation, organizational development as an interim manager.

WWW.BBJ.HU

LIFE 23

Budapest Business Journal | Dec 2 – Dec 15

GREAT

〉

QUOTES

〉FOR US, DISCUSSION DOES NOT STAND FOR EATING SCONES AS IT DID FOR YOU; WE DID DISCUSS THE LAW.

Sándor Czomba, state secretary of employment, speaking to member of the Democratic Coalition (the post-MSzP party) Erika Szűcs, noting that none of the representatives of DC had participated in the discussion of the new Labor Code

〉HUNGARY IS ALREADY ON THE ROAD TO SUCCESS, THOUGH MANY CAN’T SEE THIS.

National economy minister György Matolcsy in a university lecture on the country’s economy

〉IN TOUGH TIMES FOR SPAIN AND EUROPE YOU

HAVE RECEIVED A CLEAR MANDATE FROM YOUR PEOPLE TO PASS AND IMPLEMENT THE NECESSARY REFORMS.

German chancellor Angela Merkel, writing to new Spanish prime minister Mario Rajoy, wising him “much luck and success” in his bid to ease Spain’s 21.5% jobless rate and rescue the country from the eurozone debt crisis

〉I’M THE FIRST TO ADMIT THAT WE’VE MADE A BUNCH OF MISTAKES.

Facebook’s Mark Zuckerberg writing in his blog in a response to the findings of unfair and deceptive business practices by the Federal Trade Commission, which has concluded a two-year long investigation into the social networking giant

〉IT’S A WORK IN PROGRESS. Overweight actress Melissa McCarthy, known for her roles in series like Gilmore Girls and Mike and Molly, talking about her body

〉I FEAR GERMAN POWER LESS THAN I AM BEGINNING TO FEAR GERMAN INACTIVITY

Polish foreign minister Radek Sikorski in an impassioned plea to Germany to save the eurozone

[ EDITORIAL ]

Stocks in exchange

C

an it be done? - this is the question that many are asking when looking at the Hungarian bourse these days. Three technical listings, two new trading platforms, trading in foreign shares in forints – all of these within just a few days.

The Budapest Stock Exchange is desperately trying to revitalize Hungary’s capital market, but we suspect that it might be too little, too late, especially in the wake of Moody’s downgrade of Hungary’s debt rating to junk status.

This will compound the bourse’s problems even further. The net impact of the downgrade on the domestic capital market is difficult to assess, but it will surely accelerate capital inflows, increase risk premium on equities and yields on bonds.

The new developments on the stock exchange seem to be impressive, but will they live up to the BÉT’s expectations and stop steadily falling turnover? Hungarian investors can now trade in ten blue chips in forints, however, they have had cheaper access to a wider range of foreign shares through brokerages for years. In 2011, there were five new listings, but all of them technical. Sadly, the BÉT cannot yet fill the huge gap left by the withdrawal of Hungarian banks from financing businesses.

Another development is the delisting of Hungarian government securities from the bourse, although this might actually be good news in contrast to other types of delistings. Government bonds and T-bills will instead be traded on the electronic and multilateral trading system of MTS Hungary from January 2, 2012. The Government Debt Management Agency expects a boost in the turnover of government securities in a platform tailor-made for these instruments especially by foreign investors, who are more familiar with the MTS system.

In order to make the commodities market attractive for small investors, who so far have stayed away from such products, the BÉT is adding new futures contracts to the products that may be traded in the commodities section.

But all this will soon be the problem of the Vienna Stock Exchange, seeing the advancing consolidation of exchanges in the region. After all, the two bourses now have the same chairman, from Austria, of course.

〉I THINK COUNTRIES IN EUROPE AND OUTSIDE

OF EUROPE SHOULD BE PREPARED TO GIVE MORE MONEY TO THE IMF. Dutch Finance Minister Jan Kees de Jager on the possibility that the IMF could provide additional funds to the European Financial Stability Facility

〉FIDESZ HAS 110% CONFIDENCE IN

MATOLCSY AFTER LAST WEEK’S EVENTS Fidesz caucus leader János Lázár, at a party meeting after ratings agency Moody’s had downgraded Hungary’s status to junk

Your first address if you like to start business in Slovakia! cegekalapitasa.hu BBJ-PARTNERS Netherlands - Hungarian Chamber of Commerce

Media representation: Absolut Media Zrt Address: Madách Trade Center 1075 Budapest, Madách Imre út 13-14., Building A, 8th floor Telephone +36 (1) 398-0344, Fax +36 (1) 398-0345, www.bbj.hu Editor-in-chief: MELINDA TÜNDE DÓRA dmt@bbj.hu • Copyeditor: TAMÁS DEME • Proofreading: ROBIN MARSHALL Editorial staff: PATRICIA FISCHER, ANIKÓ JÓRI-MOLNÁR, GABRIELLA LOVAS, ZSÓFIA VÉGH • Lists: BBJ RESEARCH (research@bbj.hu) News and press releases: news@bbj.hu Design: ABSOLUT DESIGN STÚDIÓ (production@bbj.hu) • Art director: Tamás Tárczy • CEO: TAMÁS BOTKA (publisher@bbj.hu) Operations director: BALÁZS ROMÁN • Advertising: ABSOLUT MEDIA KFT (hirdetes@amedia.hu) • Sales: Viola Farkas (viola.farkas@bbj.hu) Circulation and subscriptions: Vanda Taletovics-Vedres (circulation@bbj.hu) • Printing: Absolut Print Kft

What We Stand For: The Budapest Business Journal aspires to be the most trusted newspaper in Hungary. We believe that managers should work on behalf of their shareholders. We believe that among the most important contributions a government can make to society is improving the business and investment climate so that its citizens may realize their full potential.

The Budapest Business Journal, HU ISSN 1216-7304, is published bi-weekly on Friday, registration No. 0109069462.

It is distributed by HungaroPress. Reproduction or use without permission of editorial or graphic content in any manner is prohibited. ©2011 BUSINESS MEDIA SERVICES LLC with all rights reserved.

The Budapest Business Journal’s print run is audited by MATESZ, 1034 Budapest, Bécsi út 122-124, a member of IFABC.